How to Write an Employment Contract

Creating sound contracts is a mix of good legal support and careful consideration. The ASK team take you through the process.

Key Information
The Following is a brief outline of the typical contents within an employment contract. The contract must include identification of contract parties, name and address of employer and name, date of birth and address of employee. The beginning and term of employment, if applicable, the date of entry and in case of a temporary contract, the termination date, are also stated here. In this case the general rule is that the contract terminates automatically without notice being given.

Term of Employment
Generally one must differentiate between temporary contracts and contracts for an indefinite time. Indefinite contracts end upon termination on behalf of at least one of the parties to the contract.

Trial Period and Term of Trial Period
Usually, an unlimited term contract begins with a trial period; depending on the employment laws in a country, this may be as long as six months. During this testing period both employer and employee can find out if they hit it off and if they can work together. During the trial period a shorter notice can be given (for instance 14 days).

Instead of an unlimited term of employment with a trial period an "employment on trial" can be entered into (as a trainee for instance). The employment terminates automatically on the date agreed beforehand without notice to be given. For continuation a new contract must be entered into.

Terms of Notice
Terms of notice are often defined by law. Longer terms of notice may be contractually agreed upon.

Additional Contractual Agreements or Social Benefits/Fringe Benefits
If there are collective agreements and shop agreements, a reference in the contract of employment is sufficient. Sometimes certain benefits are expressly mentioned in the contract.

'Small' benefits (like lunch coupons) are not mentioned in the contract of employment.

Overtime Pay
In most cases the admissibility and compensation of overtime are stipulated by collective and shop agreements. However, white collar workers are not paid by the hour and entitled to a monthly salary which discharges any overtime work.

In companies with flexi-time overtime hours can be settled by extra paid leave or free time.

Side-Line Job
Principally the employee is obliged to devote his full work capacity to his company. So side-line jobs in some countries may require the employer's approval if there is a conflict of interest.

Reimbursement of Expenses
Pointing out and explaining company policies should be sufficient. Yet individual agreements must be part of the contract of employment (for instance travelling and commuting expenses).

Relocation Expenses
If at the start of a job an employee has to relocate many employers pay either partly or in full for the move. Often there is a (pro rata) repayment clause in case the employee terminates the employment after a short period.

Job/Position/Area of Responsibility
Ideally under this item a work or job description is given. It covers the new employee's tasks, competency, position in the hierarchy and responsibilities. Yet, in most contracts there is only a description of activities, functions and job title.

If the employer wants to be in a position to possibly transfer the employee at a later stage or entrust other tasks to him, if necessary, this has to be stated in the contract.

For trainees the scope of education is often described. A reference to the agreed training schedule (points and terms of employment, training measures) may be advisable.

Place of Employment
This is an important issue for companies with central headquarters and affiliated companies or branches at other locations. For people taking up employment for the first time the place of training and the subsequent work place may differ. It is also possible that the employer contractually reserves the right of transfer to another location.

There are numerous options as to how employees in the hairdressing industry are paid which vary from country to country and are subject to local employment laws, customs, industry awards and individual negotiations. Whatever system of remuneration you adopt for your employees it should be clearly stated in the employment contract.

Working Time
In many countries work hours and breaks are determined by law, or by collective agreements or shop agreements or individually agreed upon. The employment contract needs to state the hours and days worked with reference to breaks, days off, and protocol for requested time off, roster changes or overtime request. 

The amount of holiday both in the form of annual leave and statutory holidays varies from country to country depending on the law as do issues such as the time frame elapsed before an employee become eligible for holiday and rates of holiday pay etc.

Obligation to Maintain Secrecy
Every employee is obliged to keep internal matters of the work and of the company secret (technical know-how, market strategies, personnel organisation, sales arrangements, planning etc.).

Inability to Work
In case of inability to work the employer must be informed forthwith. Often a doctor's certificate must be provided as of the third day of absence due to ill health.

Competition Agreements
During the term of employment it can be stated that there is no leeway for the employee to ‘moonlight’ for a competing company.

Form of Notice
Notice in writing or a more specific form, for instance ‘registered’ mail can be agreed upon and should include a reference to the amount of notice required to be given.

While this post examines the general structure of a contract, we always recommend seeking professional legal advice as depending on the country you live and work in there are many various laws governing the employee employer relationship.