Employment Contract: Key Terms, Legal Protections, and Essential Considerations

Did you know that a seemingly straightforward document like an employment contract can have significant implications for both your professional and personal life? An employment contract is a legally binding agreement that defines the relationship between an employer and an employee. It specifies the rights, responsibilities, and obligations of each party, and any breach of its terms may lead to legal consequences.

In Singapore, the Contract of Service, commonly known as an employment contract, is governed by the Employment Act 1968. This law mandates certain requirements that must be included in such agreements. Therefore, it is essential to fully understand the terms and conditions outlined in your employment contract before signing, ensuring that you make an informed decision.

Key Terms in an Employment Contract

1. Employment Details

Your employment contract should clearly outline:

• Employer and employee details
• Job title and job description
• Start date of employment
• End date (if it is a fixed-term contract)

2. Probation Period

Not all employment roles require a probationary period. However, if your role includes one, it should be explicitly stated in the contract, including:

• The specific duration of the probation period
• Whether the notice period during probation differs from the notice period after confirmation

Clarifying these details in writing can prevent misunderstandings.

3. Salary and Payment Terms

The salary clause is one of the most important aspects of any employment contract, as salary disputes are common. Your contract should specify:

• Basic salary and payment frequency (at least once a month, as per the Employment Act)
• Overtime pay arrangements
• Salary payment date (should be within seven days of the agreed date)
• Mode of salary payment (e.g., bank transfer, cheque)

Failure to pay an employee’s salary on time is an offence under the Employment Act. Additionally, overtime pay should be agreed upon and clearly stated in the contract.

4. Medical Leave and Benefits

If you are covered under the Employment Act and have worked for at least three months, you are entitled to paid medical leave, provided that:

• You notify your employer within 48 hours of your absence
• Your entitlement is calculated on a pro-rata basis, based on the number of months you have worked

Additionally, maternity leave and other medical benefits should be clearly outlined in the contract.

5. Public Holidays and Annual Leave

• Public holidays: Employees are entitled to paid public holidays. If you are required to work on a public holiday, your employer must compensate you with extra pay or time off in lieu.
• Annual leave: Employees who have worked for at least three months are entitled to annual leave. The minimum entitlement starts at seven days in the first year and increases with years of service.
• These entitlements should be clearly specified in your contract to prevent any misunderstandings regarding leave payment and eligibility.

6. Transfer of Employment

Employment transfers often occur during company mergers or takeovers. In such cases, an employer has the right to transfer employees as long as the employment terms remain unchanged. If your employer is planning an expansion that may result in your transfer, it is advisable that your contract includes provisions addressing this possibility.

7. Termination of Employment

Termination refers to the ending of the employment contract between an employer and an employee. The termination clause should specify:

• Notice period requirements
• Whether compensation in lieu of notice is allowed
• The conditions under which termination without notice is permitted (e.g., misconduct)

A termination letter is mandatory and should always be in writing. If an employee believes they have been wrongfully dismissed, they have the right to seek legal assistance.

Drafting a Strong Employment Contract

Now that you understand the essential terms of an employment contract, it is crucial to ensure that your contract is comprehensive and legally sound.

When & Where to Seek Legal Help

If you have concerns about your employment contract, are facing legal employment disputes related to your job, or need professional guidance, RBN Chambers LLC is here to assist you.

Contact us today for legal support and ensure that your employment rights are protected.