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Advisory Services

Getting Your Contract Right

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Make a conscious effort to put in place fair and progressive employment contract. Benchmark employment terms against industry norms or best practices.

A clear, well-written employment contract helps employers establish a trusting relationship with their employees, and reflects the company’s values and strategies. It benefits both employers and employees as it can help prevent potential miscommunications and missteps. Clear employment terms allow both parties to have a better understanding of their rights and obligations. These terms should be clearly worded into the employment contract to minimise potential disputes and grievances. The terms should include information such as the details of employment, working hours and rest days, salary, leave entitlements and medical benefits, probation, and notice periods.

Apart from having well-written contracts, it is important to have a set of fair and consistent policies which are well implemented by the employer and communicated to the successful applicant. Employers are encouraged to explain the terms of employment clearly to the employees, giving them an opportunity to clarify their doubts.

We encourage employers to pay attention to these particular areas which are common grounds for disputes with employees:  termination of employment, salary payment, annual leave, public holidays, medical benefits, entitlements to bonuses/ annual wage supplements, commissions, and reimbursement of expenses incurred.

Here are some tips which you could consider when crafting the employment contracts:

Termination of employment

  • As poor performance can be a common reason for termination, you may consider having measures in place such as performance improvement plans, training and development opportunities to increase their skills and confidence to do the job, coaching opportunities, counselling or redeployment to a position to build on employees’ strengths.
  • Any decision on termination should be made only after adequate warning has been given to the employees, and in the case of misconduct, an inquiry must have been conducted.
  • The duration of notice period should be the same for both employers and employees, and either party should have the option to terminate the contract by serving notice.
  • This should be of a reasonable duration depending on the job level of the employee.
  • Do provide due notice or payment in lieu of notice to the employee.

Salary payment

  • Ensure that the date of salary payment, components of the salary, frequency of payment, and when the salary should be paid upon termination are included.
  • Do arrange for the payment to be made at least once a month and within a week after the end of the salary period.
  • Do arrange for the final salary to be paid within a week of the last day of employment in the case of employees who have left employment without notice or served the required notice period.

Annual leave

  • Ensure that you have a comprehensive policy on annual leave for clarity on application and utilisation of leave.
  • You are encouraged to allow encashment of unconsumed leave at the end of the employee’s employment.
  • You may also consider allowing employees to carry forward their leave for at least a year.

Public holidays

  • The entitlements and arrangement for work done on gazetted public holidays should be stated in the employment contract.
  • When employees have put in additional hours over the public holiday due to work commitments, employers are encouraged to be flexible and recognise their effort.

Medical benefits

  • Ensure that you have a comprehensive policy on sick leave for clarity on application and utilisation. This is a basic provision which should be given and clearly stated in the employment contract.
  • Allow the employee to have sufficient rest and to recover well before returning to work.
  • Employers are encouraged to recognise medical certificates from all registered medical practitioners.

Bonus/ Annual Wage Supplement

  • As an employee may take this as a norm provided by employers, do state the entitlements and eligibility conditions clearly in the employment contract (or at least in an accompanying policy document such as the employee handbook, company circular or policy document).
  • You are encouraged to state the conditions clearly whether an employee is entitled to bonuses/ annual wage supplements in the event the employment contract is terminated, especially during the probation period.

Commission Structure

  • Do ensure that the entitlements, conditions and the clauses tied to it, are clearly stated and that you run through it thoroughly with the employee.

Reimbursement of Expenses

  • Indicate the types of reimbursements which the employee would be entitled to. In the event that the details are indicated in the employee handbook, you are encouraged to run through the details before the employee joins the organisation.

Employment disputes can be minimised when both employees and employers take ownership of their respective roles. Employees should always read their employment contracts, keeping a look out for key employment terms before signing their contracts. Employers should benchmark employment terms against industry norms or best practices. When everyone plays their part and applies the principle of reciprocity, it makes the workplace a better one for all.

 

Find out more

For a start, you can look at:

Workshops:

The workshop provides employers with an overview of the Employment Act as well as insights to the many HR and IR-related concerns or issues at the operational level. It will also cover recent changes in Singapore’s employment legislation, which include the issuance of key employment terms and itemised payslips to employees to deepen employers’ understanding of their key responsibilities under the new employment landscape.

This workshop enables employers and HR practitioners to understand the importance of preparing well-defined, comprehensible employment contracts, be familiar with their contractual obligations and develop clear, consistent and progressive HR policies. The workshop will also share information about key terms and conditions for employees in different types of work arrangements such as contract for service, contract of service, employment regulations for part-time employees as well as employees on term contracts. Participants will also be given tips on developing progressive HR policies in the company.

Guidelines:

This sets out fair employment practices that should be adopted by employers to help prevent discrimination in the workplace.

Other forms of assistance:

In the event of disputes, you may approach the Tripartite Alliance for Dispute Management located at Devan Nair Institute for Employment and Employability, and the Ministry of Manpower Services Centre for assistance. Alternatively, you may refer to the FAQs for more information.