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Why it’s important to have an Employment Contract

An employment contract is a reciprocal agreement in which an employee provides their services to a person or organisation, which establishes the service requirements and the corresponding remuneration to be provided for those services. Employment contracts are highly recommended and a way in which both parties can create a mutual understanding of the relationship.

A permanent contract of employment can be terminated by either party in the form of a dismissal, retirement, retrenchment or a resignation. Reasons for the termination of an employment contract, initiated by the employer may only be for valid reasons, performed fairly and in line with the labour law.

Fixed term employment applies when an individual is employed for a pre-determined period, defined entirely according to operational requirements.

A fixed term contract can be for any period, however, if an employee is compensated under the legal threshold labour law limits such a period to 3 months. The 3 month period may only be extended if there is a justifiable reason for doing so, for example, replacing an employee that is temporarily absent (maternity leave).

A Fixed Term employee, compensated under the legal threshold, employed for longer than 3 months (without a justifiable reason or termination date) will be deemed to be a permanent employee.

If a Fixed Term employee, compensated under the legal threshold, is offered a renewal of their contract, such an offer must be in writing and provide the reasons of such renewal as well as a new termination date, after which the need for the position the employee is filling, will end. A Fixed Term employee is entitled to severance pay in the same manner as a Permanent employee.

If the demand for annual increased production or the project ends, the position will also end. If the position remains after the reason for the Fixed Term Contact ends, then the contract does not satisfy the definition of a Fixed Term contract.

Part-time Employment exists when an employee is compensated based on the period they work (the hours they work) which is less than the period the employer’s permanent employees work, in the form of a short or reduced day, week or month. A part-time employee may not receive less favourable terms and conditions of employment than their permanent counterparts. A part-time employee, compensated under the legal threshold, must be given similar access to training and development, and be given the same work opportunities as permanent employees.

Temporary Employment Services (“TES”) exist where there is an employment agreement between a third-party Labour Broker an Employer and an Employee. The Broker facilitates the employment relationship and its Terms and Conditions. Both the company and the TES are declared jointly and severally liable should the TES contravene the Basic Conditions of Employment.

An employee of the labour broker, compensated under the legal threshold, employed for longer than 3 months by a client will be deemed to be an employee of that client. Such an employee may not receive less favourable terms and conditions of employment than their permanent counterparts.