21 November 2022
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An employment contract is a written agreement between an employee and his employer with labor rights. It specifies the rights and duties of both the employee and the corporation.

So, you will find out the essential things on this page:

What is an Employment Contract?

What is an Employment Contract?

An employment contract or an employment agreement is legally binding between the employee and the employer. With the contract, the employee agrees to complete the specified task, and the company consents to pay the agreed-upon salary.

Furthermore, additional responsibilities are formed between the contracting parties and the main requirements (labor for payment), including future competition, benefits, communications, and wages.

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Form of Employment Contract

Form of Employment Contract

The written contract is crucial in the case of conflict. It specifies which rules must be followed in the working relationship. Although a contract between an employer and an employee can be reached orally, a formal employment agreement documents the agreement.

Employees have the right to write proof of the significant working conditions that apply to them and may thus obtain an employment contract. A labor or collective agreement might also justify a mandatory form in specific instances.

Many people are unaware that some agreements in an employment contract, such as the duration of the job relationship, must be established in writing.

Elements of the Employment Contract That Are Required

Elements of the Employment Contract That Are Required

Although the parties are mainly free to negotiate the terms of an employment contract, specific minimum requirements must be met. This contains rules governing the nature and extent of employment, working hours and vacation, compensation, and termination. This includes the following:

  • Name and address of employee & employer
  • Beginning and duration of the employment relationship
  • Type of activity (summary of activities)
  • Remuneration/fee: Amount, composition (if applicable, surcharges, allowances, premiums, special payments), and due date
  • workplace
  • notice periods
  • Regulations on working hours
  • Holiday entitlement, sick leave
  • If applicable, references to collective bargaining agreements (collective agreements, service or company agreements)
  • If, on the other hand, no agreements have been made in the employment contract regarding working hours, breaks, vacation, or notice periods, the corresponding statutory provisions apply.

Length of Employment: Limited vs. Permanent

Length of Employment Limited vs. Permanent

Generally, a permanent employment contract is preferable to a fixed-term one; for example, additional restrictions regarding dismissal security exist. However, a fixed-term job contract is frequently provided initially.

Without a clear substantial cause, a time restriction can typically apply for a maximum of two years and must be accepted in writing. If she does not, the employment contract remains in effect indefinitely.

Limiting an employment contract is also permitted if there is an actual justification for the restriction, such as temporarily substituting another employee on maternity leave or if the task in issue is only necessary for a limited time. Furthermore, there are exceptions, such as the age limit.

The Trial Period

As an employee, you are only entitled to a probationary term if it is clearly stated in your employment contract. The job relationship is terminated without a trial period if your work contract does not include such a clause.

During the probationary phase, the employer and the employee may terminate with only two weeks' notice. After then, it is sometimes more difficult for employers to provide notice since the Employment Protection Act takes effect after six months if the employer's firm surpasses a specific size.

What Responsibilities do I have Under the Employment Contract?

What Responsibilities do I have Under the Employment Contract

Job advertising can be utilized if there are no specifications in the employment contract. In general, the employee owes just the activity specified in the job contract. This indicates that the more specific the description, the more likely the employee will be able to decline responsibilities later if they do not match his assignment or qualifications.

Employees, in general, owe no specific success in the course of their employment. They must do all their power to perform a job on par with the average of other employees. Dismissal for bad performance is only feasible if the employer can demonstrate that an employee has consistently performed below average despite warnings and talks.

The employer might indirectly impact the employee's achievement with extra incentives such as achievement packages.

Minimum Wage, Bonuses, Benefits

The wage, over all else, should be established in the written contract. The min wage ensures employees' living level.

Furthermore, the business might give various perks to the employees. This includes rewards, annual airline tickets, vacation money, bonuses,  variable compensation portions, and in-kind perks. The company will often put a "fixed" monthly wage in the employment contract, which means that the employee will receive the same compensation every month, regardless of how many working days there are.

Nevertheless, these are essentially optional extra perks supplied by the company.

A bonus is a benefit provided by the employer in addition to the base wage frequently tied to the personal performance of the individual employee and the company's or a department's performance or outcomes. It is an optional advantage if the company is not contractually obligated to provide compensation. If the worker is eligible for a periodic compensation or bonus payment, this is typically given out once a year. The conditions specified in the employment agreement must be followed when determining the amount of remuneration.

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Work location: commuting, home office, or overseas

In most cases, the employer determines the location of the workplace. The place of work refers to the location where employees primarily do their duties. In most circumstances, this is the employer's corporation or business premises.

If the employee's place of work is not mentioned in the employment contract, the employer is allowed to select the employee's location at his reasonable discretion within the limits of his management powers.

Nevertheless, it is feasible that the person will be allowed to change jobs under the employment contract. More specific workplace laws can be derived from a firm agreement, an appropriate collective agreement, or a legal provision. For example, an alternative for a home office, remote working, or coworking spaces might be agreed upon in the employment contract.

Employees are not obliged to stick to a specific workplace; it's negotiable.

Employment Contract Types

Employment Contract Types

Depending on the profession and the firm, you may face many agreements.

Written Employment Contracts

A written contract is an excellent approach to precisely describe the position, responsibilities, and perks and avoid confusion.

Read an employment contract carefully before signing it. Check that you are happy with every part of the contract. If you violate the agreement, you may face legal consequences.

You must be able to uphold all aspects of the written agreement. For example, if the contract needs you to stay at work for a certain amount of time, ensure that you can meet that demand.

Also, if the contract restricts where you may work after leaving the organization, evaluate if you are happy with this restriction.

Implied Employment Agreement

An implicit employment contract may be inferred from remarks made during an interview, while promoting the employee, or from anything in a training manual or handbook.

As an example:

  • Implied contracts can be inferred from the employer's conduct, comments, or prior employment history.
  • An employee may have witnessed or documented a pattern of promotions, increases, and yearly evaluations.

A potential employee may be persuaded during a job interview that their employment is long-term or permanent unless they are fired for a legitimate reason.

Employment Contract Example
Employment Contract Example

Working Contract Agreement Template (Word File)

Job Contract (Job Agreement) Letter (PDF File)

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