What is an Employment Contract?
An employment contract is a legal document that set out the terms and conditions which would govern the relationship between an employer and an employee. Every employment relationship is governed by an employment contract. A well-drafted employment contract would provide both parties peace of mind as it would reduce the possibility of employment disputes.
Why do you need an Employment Contract?
Where applicable, the Employment Act sets out the basic terms and conditions of employment, rights and responsibilities of both parties. The other relevant laws regulating employment in Singapore would include the Workplace Safety and Health Act (WSHA), Work Injury Compensation Act (WICA), Trades Union Act and Retirement Age Act.
However, the basic protection that statutes may provide can be limited and rigid. An effective employment contract should be mutually beneficial to both the employer and employee. Employers will have an extra layer of protection for their business interest. A successful compensation and employee benefit arrangement would reward and recognize the hard work of the employees.
What are the key features of an Employment Contract?
A well-drafted employment contract should typically contain these important terms:
1. Nature and scope of services that are provided
The employment contract should set out clearly the nature and scope of the service that the employee will provide for the employer. Other specification can be whether the employment contract is exclusive or the employee is allowed to render his/her service to more than one employer at any time.
2. Remuneration terms
The employment contract should also be clear on the remuneration terms and the billing stricture. For instance, the employment contract should state the amount of salary that the employer will pay the employee on a weekly/monthly/yearly basis (depending on the agreement in the first place, subject to the parties’ agreement).
The employment contract should also include the method of remuneration, by cash/cheque or bank transfer. The employee can also negotiate to include a clause that would charge the employer late fees and/or interest for late payments.
3. Expenditure and expenses incurred
The employment contract should set out who will bear the cost of out-of-pocket expenses incurred during the course of the employment and the official procedure in claiming that cost.
For instance, the employment contract can set that the employee should be able to be reimbursed for all the expenses that are incurred in the course of employment, subject to the reasonableness of the claim and production of proof of expenditure.
4. Intellectual property rights (products created in the course of employment)
The employment contract should set out clearly which party will have the rights to the intellectual property created in the course of the employment. Typically, employers will prefer to retain the rights to the content created by the employee during the course of employment. This clause is essential to avoid any issues in the future due to the conflict of the ownership rights to certain contents.
5. Termination Clause
The employment contract should set out clearly specific circumstances in which the employer is allowed to terminate the employment contract with immediate effect and with no liability to pay any compensation or vice versa. Such instances can be due to committing a crime or breaking the employment contract in place.
The employment contract should also state the specific timeframe in which either party is able to terminate the agreement should notice be served to either party. This would allow for both parties more business efficacy as there is less likelihood of problems such as lack of manpower or sudden loss of a job.
6. Indemnity Clause
The employment contract should also state which party would bear the legal in the situation that there is a legal suit between each other in relation to the service provided. This clause would dismiss any form of conflict between the parties in a relation of the indemnity.
7. Conflict of interest
The employment contract should be clear with a conflict of interest clause that would render the employee to not engage in any activity that would compromise his/her service independently.
The employment contract should be clear that the employer will profess that to the best of his/her ability, that there will be no conflict of interest in the performance of his/her obligations under this employment contract.
8. Personal data protection (PDPA)
The employment contract would also include a clause on data protection. This clause will provide that both parties are to comply with its obligations under the Singapore’s Data Protection Act in the course of employment.
An employment contract sets out the terms and conditions which would govern the relationship between an employer and an employee. It is a necessity to maintain business efficacy and good employer-employee relations.
Please note that this article does not constitute express or implied legal advice, whether in whole or in part. Should you need to draft up an employment contract, please send us an email at firstname.lastname@example.org.