Most of us think we understand employment contracts until we actually need to use them. That’s when the surprises start emerging – and they can be significant for both employers and employees. Let’s uncover some of the most important truths that could impact your working relationship.
Here’s something that catches almost everyone off guard: your employment relationship doesn’t start on your first day at work, or even when you sign your contract. It begins the moment you accept a job offer, even if it’s just a verbal “yes” over the phone. This single fact has profound implications. For employers, it means that withdrawing an offer after acceptance could constitute an unfair dismissal – even if the person hasn’t worked a single day. For employees, it means you’re already in a legal relationship with your new employer before you’ve signed a single piece of paper.
While verbal agreements are legally binding, navigating employment without a written contract is like driving without insurance – technically possible, but incredibly risky. For employers, written contracts protect business interests and provide a framework for managing relationships. For employees, they guarantee basic rights and provide crucial clarity about expectations and benefits.
Most people focus on the obvious elements of an employment contract – salary, job title, and working hours. However, some of the most important aspects are often overlooked or misunderstood. Take retirement age, for instance. Many are surprised to learn that there’s no statutory retirement age in South Africa. Without specifying it in your contract, enforcing retirement becomes a legal minefield that could lead to age discrimination claims.
Probation periods are another commonly misunderstood area. They’re not automatic rights of employers to impose at will – they must be explicitly stated in the contract, preferably accompanied by clear performance metrics and evaluation processes. Without these elements clearly defined, probation periods can become contentious and ineffectual..
Notice periods deserve more attention than they typically receive. While the law sets minimum requirements, longer notice periods can benefit both parties, especially in senior positions or roles requiring extensive handovers. The key is ensuring that whatever notice period you set applies equally to both employer and employee.
Perhaps no aspect of employment contracts generates more myths than restraint of trade clauses. Many believe they’re automatically unenforceable – they’re not. Others think they can use them to prevent any form of competition – they can’t. The truth lies somewhere in between. A properly crafted restraint of trade must protect legitimate business interests, not just prevent competition. It needs reasonable geographic limits (usually where the business actually operates) and time restrictions (rarely enforced beyond 12 months).
One of the most fundamental decisions is correctly identifying the type of employment relationship you’re entering into. Permanent employment continues until retirement or termination via dismissal or resignation , while fixed-term contracts end on specific dates or events. Full-time versus part-time status depends on working hours, and these can exist in either permanent or fixed-term arrangements.
The distinction between employees and independent contractors is particularly crucial, as it determines which laws apply and what protections are available. Getting this wrong can have serious legal and financial implications for both parties.
The key to an effective employment contract isn’t just including all the right elements – it’s ensuring they reflect the actual relationship you’re creating. For employers, this means considering industry-specific requirements, company culture, and operational needs. For employees, it means ensuring your professional growth opportunities, work-life balance needs, and role-specific requirements are properly addressed.
Your employment contract isn’t just another piece of paperwork – it’s the foundation of your working relationship. Whether you’re hiring or being hired, taking the time to get it right can prevent countless headaches down the road. The best time to address potential issues is before signing, but if you’re already in an employment relationship, it’s never too late to review and update your agreement.
With clear, well-crafted contracts, everyone can start the employment journey on a strong footing. Consult the Justine Del Monte team for legal guidance and feedback on your next employment contract.
