Home - Key terms to include in an employment contract

UpdatesMar 20, 2019

Key terms to include in an employment contract

To be legally binding, an employment contract can be verbal or in writing.

To be legally binding, an employment contract can be verbal or in writing.

If the contract is verbal, the existence of an agreement can be inferred by the fact that the employee readily performs work and the employer remunerates the employee.

A contract gives rise to obligations that are enforced or recognised by law.

4 necessary criteria for an employment contract

  1. There must be an agreement between the parties. This typically consists of an offer and acceptance of employment.
  2. Each party must provide consideration (i.e. promise something of value) in return for the obligations undertaken by the other.
  3. The parties must have intended to create a legal relationship.
  4. The agreement must be certain and complete. (An agreement is uncertain when it is either lacking an essential term, or where the parties have not reached a final agreement about the terms.)

Essential terms of an employment contract

It has been suggested that the only essential terms of an employment contract are:

  1. The terms identifying the parties.
  2. An agreement to serve.
  3. The basic remuneration of the employee.

Key terms of an employment contract

Remember that providing a job description during the commencement of an employment relationship is not enough. Ensure that you have a solid contract in place that governs the terms of the employment relationship.

As the employer, it is your obligation to clearly set out the employment conditions. If there is any dispute about the terms of the contract, it will be extremely difficult to prove what was agreed to without written evidence.

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