Drafting an employment contract

Many of the labour disputes between employers and employees would not arise if both the Employee and Employer had signed a well written Employment contract. Some of the specific clauses which ought to be included in an Employment contract are; Probation period clause: According to Rwanda’s Labour Code, the probation period should not exceed 6 months. A probation period is a trial period during which the parties are able to determine whether they want to enter into a definitive contract with each other. Including a probation period in an employment contract is beneficial to both the employee and employer. On the one hand, the employee is able to examine the working conditions, pay, etc and make an informed decision whether he or she wants to enter into a definitive contract with the employer and on the other hand, the employer is accorded an opportunity to examine the quality of the employee’s output before determining whether to hire the employee definitely. If the employee is dissatisfied with his/her employment, the employee can resign immediately during this period without any requirement to serve notice to the employer or any further obligations to the employer. Likewise, if the employer realizes that hiring this particular employee was a mistake, the employer can dismiss the employee without having to give notice to the employee or severance pay to the employee. Duration clause: Under the law, an employer and employee can agree to have a fixed term contract e.g a one year employment contract. After the agreed period, the parties are free to renew this contract if they so choose, if they do not renew it, then it terminates naturally after the duration period specified has elapsed. The beauty of a duration clause is that if after the duration of the contract has elapsed, and one of the parties does not want to renew the contract, that party will simply opt not to renew the contract. If however, the contract has no duration clause the Employment contract is deemed to be indefinite and it can only be terminated for ‘legitimate motives’. Termination clause: This clause is probably the most important given that most labour suits disputes are based on wrongful termination/dismissal. The termination clause states under what circumstances an employer can dismiss the employee or the employee can resign from his/her employment. According to the law, an employment contract can be terminated for “legitimate motives” and “gross misconduct”. Unfortunately, the law does not define what constitutes “legitimate motives” or “gross misconduct” and a good contract will set out what the two terms mean. In practice, legitimate motives for an employer to dismiss an employee will include the employee’s perpetual late coming, absconding from work or unsatisfactory performance. Gross misconduct is a graver offence which entitles the employer to dismiss the employee without notice, e.g insubordination, fighting and stealing etc. Compensation clause. This clause lays out the salary due to the employee and specifies at what intervals it will be paid. Under the law, employers may pay their employees daily, fortnightly or monthly. Daily or fortnightly pay is for short term employees. It is important that the compensation clause indicate whether the amount stated is gross pay or net pay(amount remaining after statutory reductions like tax and social security contribution), in order to avoid any uncertainty. Other clauses which may be included in an Employment contract are; dispute resolution clause, leave clause and notice clause. It is important to note that no Employment contract can envisage all the likely employment issues that shall arise. An Employment contract merely sets out the guiding principles that shall govern the contractual relationship between an Employer and an Employee. It is important that it be written in simple language that is understood by both the employer and employee. kalricardo@yahoo.com Richard Balenzi is a lawyer