An employment contract is one of your business’s most important documents. It outlines all the key terms and conditions of employment and forms the basis of your relationship with your employee.
Employment Contracts Philippines
The Labor Code of the Philippines details six types of employment:
- Probationary employmentEmployment subject to a period of observation and evaluation aimed at gauging the probationer’s suitability for permanent employment.
- Regular employmentDeemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. Usually, however, employees start as a probationary employee. Immediately after this status unless terminated or extended, the employee attain regular employment status.
- Casual employment
Deemed casual if not a regular employee. Granted to employees who have rendered at least one year of continuous or broken service
- Project employment
Employment for a specific project and terminated upon completion or at a predetermined date
- Seasonal employment
Employment that’s recurring or irregular
- Fixed-term employment
Employment with a fixed start and termination date agreed upon by both parties and which does not exceed 6 months
A company can utilize one or more of these types of employees. A contract that clearly states the terms of employment suitable to the employee type eliminates confusion and inhibits future disputes.
However, a good employment contract should be flexible enough to allow job descriptions and other parts to change over time.
Therefore, all parts of an employment contract must be worded carefully to strike the ideal balance of precision and flexibility.
Key parts on an employee contract
- Job title. Describes the role or position an employee holds in a company. Job titles can also include terms that denote the level of a position and the responsibilities it holds. (i.e. managers, supervisors).The job title includes a short description of the job title’s main duties.
- Start date. The month, date, and year the employee starts work in the company. This is also the date the employment contract comes into effect.
- The salary an employee receives, which can be paid per hour, week, month, or incommissions.
- Employee benefits. Details the statutory and company-mandated benefits a worker receives, including paid leaves of absence (vacation, sick, maternity, paternity, etc.), health insurance, and so on.
- Work duration. This states the start date and the end date of a non-permanent employee’s service.
- Hours of work:Indicates the time work starts and ends on a workday.
- Length and condition of probationary period.A probationary period of employment not exceeding six months allows the employer to test the skills of an employee. The contract should state the length of the probationary period and the conditions needed to pass it.
- Periods of notice. The length of time an employee is required to inform the employer about absences, resignation, and the like. The contract should also state the employer’s obligation to give notice to the employee in cases like termination.
- Code of conduct. Details the behavior expected of every employee and the disciplinary action violations entail.
- Employee grievance mechanism.A formal, legal, or non-legal process that workers can use to inform the company of problems or complaints.
- Company policies.Rules that often define the culture of a company. Examples include policies on smoking, the use of mobile phones, the internet, and email usage, health and safety, sexual harassment, discrimination, and the like.
An employment contract may include additional provisions to its terms of employment. The most common are:
- Confidentiality clause. This is also known as a nondisclosure agreement, a legally binding clause stating that sensitive company information such as trade secrets, client lists, and future plans cannot be shared with anyone outside the company both during and after employment.
- Non-compete clause. A provision that disallows an employee from going into business or working for other entities of the same nature as the employer. The employment contract should state how long the clause is to take effect after the employee leaves the company.
- Non-solicitation clause.This clause prevents a worker from recruiting colleagues to join another company after the employee leaves the company. The clause also applies to luring clients or customers away from the company.