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Seven vital clauses every employment contract must contain...

by , 24 January 2013
If you have employees, you have to have a written employment contract to protect yourself from unnecessary visits to the CCMA. Here are seven clauses every employment contract must contain...

'It is quite surprising just how many employers out there do not provide employment contracts,' states The Labour Guide. 'They seem to have a warped idea that 'if there is no written contract, then we can do what we like with our employees.'
 
That's not the case!

According to Section 29 of the Basic Conditions of Employment Act (BCEA) if you don't provide your employee with a written employment contract no later than the first day they start working for you, you could end up in hot water at the CCMA.
 
To ensure your employment contract is set out in accordance with the BCEA, it needs to contain the following seven clauses as detailed in a recent issue of Labour Law for Managers Loose Leaf Service.
 
Seven clauses you need to include in your company's employment contract
 
Employment Clause #1: How much your employee will be paid
Your company's employment contract must include a clause that sets out your employee's wage or salary.
 
Employment Clause #2: Other payments in cash or in kind
In addition to your employee's salary, he may be entitled to other payments in cash or in kind. These may include the following five things:
 
  • Benefits like medical aid and pension funds
  • Allowances – including car, entertainment and travel allowances
  • Accommodation and food
  • Reimbursement of out-of-pocket expenses
  • Total cost-to-company packages
 
These must be outline in your employment contract.
 
Employment Clause #3: Tax implications
The tax implications of benefit funds and allowances can be complex. That's why The Practical Labour Handbook gives this smart tip for dealing with them in your employment contract: 'Specify that if any taxable benefits arise as a result of contributions made by the company to any benefit schemes or any allowances paid by the company to the employee, these will be taxed in the hands of the employee.'
 
Employment Clause #4: Reviews and increases
If you review salaries on an annual basis, include a clause in your employment contract specifying when this review process will take place. The clause should also state that the decision about whether or not to increase your employee's salary remains at the discretion of the company.
 
Employment Clause #5: When your employee will be paid
Your employment contract must state how frequently your employee will be paid. It should also state when he'll be paid and how the payment will be made.
 
Employment Clause #6: Overtime
If you require your employee to work overtime, your employment contract must state the rate of pay your employee will earn for any overtime worked.
 
Employment Clause #7: Deductions
The BCEA clearly states that your employment contract must contain a clause outlining the particulars of any deductions that'll be made from  his remuneration. These deductions include:
 
  • PAYE and income tax;
  • Contributions to the Unemployment Insurance Fund;
  • Levies such as training/skills development levies and any levies that may be imposed by a bargaining council;
  • Union subscriptions in terms of a collective agreement; and
  • Employee contributions to benefit funds such as medical aid schemes and pension funds.
 
As long as these seven clauses are clearly and succinctly written, your company will be protected from unnecessary CCMA disputes.

You don't have to be a lawyer to win your CCMA case…
Here's how to do it yourself.


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