Employment contract: Which one to use?

Estimated reading time: 4 minutes

  • South African legislation requires the employer to provide an employee with the details of his or her employment.
  • A written employment contract, which outlines and confirms the terms and conditions of employment, must be implemented in the workplace. This will assist the employer in limiting future disputes through proactive management.
  • It is crucial that the employer determines which type of contract to conclude with the employee, taking into consideration the operational requirements of the company. There are two types of contracts, namely permanent and temporary.
  • Once the employer has decided what type of contract to offer the employee, all the employee’s personal details and information must be included in the contract before the employee receives it.
  • Not only are the details of employment required by legislation; it also regulates the terms and conditions of employment between an employer and employee.

South African legislation requires the employer to provide an employee with the details of his or her employment. A written employment contract, which outlines and confirms the terms and conditions of employment, must be implemented in the workplace. This will assist the employer in limiting future disputes through proactive management. The employment contract is also one of the key elements the Department of Employment and Labour investigates during inspections.

It is crucial that the employer determines which type of contract to conclude with the employee, taking into consideration the operational requirements of the company. There are two types of contracts, namely permanent and temporary.

Read more about the employment contract from previous article.

Permanent contract

The following must be noted when choosing a permanent contract:

  • A permanent contract has a start date but no end date.
  • If an employee is employed for longer than three months, without there being a justifiable reason stipulated in the employment agreement, the employee will be considered a permanent employee until the contrary is proven.
  • A permanent contract may be subject to a trial period. If an employer is not satisfied with an employee’s performance, the correct procedures must be followed before an employee is dismissed during or after the expiry of a trial period.

Temporary contract

The temporary contract should not differ from the permanent contract, except for the term of employment. There are two types of temporary contracts: a fixed-term and a project-based contract. With any temporary contract, the employee must still be given statutory notice before his or her services are terminated.

The following should be considered with each of these contracts:

Fixed-term contract

The start and end date of the contract must be stipulated. As a rule, a fixed-term contract may only be in place for a period of three months. However, specific exceptions apply to a contract that exceeds three months: There must be a justifiable reason and this reason must be stipulated in the employment contract.

Examples include:

  • The employee replaces another employee who is temporarily absent from work.
  • The employee was employed due to a temporary increase in the volume of work (this work is not expected to last longer than 12 months).
  • The employee is employed to perform seasonal work.
  • The employee has already reached the normal retirement age in the workplace.

Project-based contract

In terms of a project-based contract, the employee is only employed until the completion of a certain project. The project will have a start date but, at the time of concluding the contract, the project’s end date is not yet known. In this case, the employment agreement must stipulate that the employee will perform services up to and including the completion of a project. The contact must also include specifics pertaining to the type of project. The contract will expire once the project is completed.

The administration side

Once the employer has decided what type of contract to offer the employee, all the employee’s personal details and information must be included in the contract before the employee receives it. The contract must also be discussed with the employee in the presence of a witness, and a copy of the contract given to the employee.

Not only are the details of employment required by legislation; it also regulates the terms and conditions of employment between an employer and employee. This is the foundation of the working relationship between the parties and by confirming this in writing in the employment agreement, uncertainties and potential friction are reduced. – Anneline Scriven, senior legal advisor, LWO Employers Organisation

For more information, send an email to Anneline Scriven at anneline@lwo.co.za, or info@lwo.co.za or visit www.lwo.co.za.