The Importance of Having Employment Contracts
Despite the fact that Section 29 of the Basic Conditions of Employment Act 75 of 1997 (BCEA), requires employers to provide employment contracts to employees once employment commences, numerous businesses still don’t issue employment contracts.
Not having a written employment contract does not mean an employment relationship (and its accompanying obligations) does not exist. It merely puts you at risk for, amongst other things, being eligible for a fine. Here follow a few (good) reasons to finally get that employment contract done.
A Contract Protects the Employer
As the Employer, you provide tools and equipment to employees to carry out their duties. Those are assets to your business and assets you presumably want returned once the employment relationship ends. The employment contract will stipulate that company property must be well looked after and returned upon termination of employment.
As a business that is in the position to employ staff, you should also have clients. If your employees have access to client information, your contract should stipulate that employees may not abuse their access by making use of such information for personal gain and should do their utmost to protect clients’ personal information.
If you are in an industry that develops intellectual property (IP) or has developed IP on which the business’s success relies, an employment contract helps you protect the IP.
If an employee shows disregard for company rules and the employment relationship, the contract enables the Employer to take action against such an employee.
An Employment Contract Provides Clarity to the Employee
The employment contract should state expectations regarding duties and conduct placed on the employee as well as provide clarity on salary, working hours, benefits, overtime, and notice period. This gives the employee clarity on what is expected of him/her and allows them to focus on doing their job to the best of their abilities.
Clear expectations and rules eliminate uncertainty which enhances job satisfaction and positively impacts staff (and client) retention rates.
A Contract Prevents Unnecessary Disputes
The employment contract should clearly state the rights and obligations of each party. This prevents unnecessary disputes and can also assist in settling any disputes that might arise.
It is wise to include a clause on how bonuses are determined as this prevents disgruntled employees when bonuses are not paid out.
Having an employment contract that legally establishes the relationship between employer and employee and clearly states expectations minimises risk and can save you money.
Reach out to LeapfrogHR to have your employment contract drafted or reviewed. It will give you peace of mind and cost you less than the fine for not complying with the BCEA.