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What is an Employment Contract?
An Employment Contract is a document that outlines the rights, responsibilities, and obligations of an employer and employee during a period of employment.
By writing out the key terms and conditions of a job in a contract, employers and employees gain a clear understanding of their roles in a company. This sets expectations for both parties in the working relationship and minimises potential disputes.
An Employment Contract is also known as:
- An employee agreement
- A contract of service
What are the different types of Employment Contracts?
Employment Contracts differ based on whether an employee works temporarily or permanently and on either a full-time or part-time basis.
Singapore’s Employment Act outlines workers’ rights, and the type of Employment Contract you sign can affect an employee’s entitlements and protections under the act. For example, part-time workers and full-time workers are entitled to different rest days, overtime pay, and leave benefits.
LawDepot’s Employment Contract template gives information on the employee entitlements that may apply based on the answers you select in our questionnaire.
1. Permanent, full-time Employment Contract
Full-time employees work at least 35 hours a week. Permanent positions do not have a pre-determined end date for employment.
2. Permanent, part-time Employment Contract
Part-time employees work less than 35 hours a week. Permanent positions don’t have a pre-determined end date for employment. This type of work arrangement is sometimes called a casual employment agreement because working hours can be sporadic and unreliable.
These employees should refer to the Employment of Part-Time Employees Regulations of the Employment Act for guidance on their employee entitlements.
3. Fixed-term Employment Contract
Fixed-term employees have an end date for their employment, as stated in their Employment Contract. As such, their employment automatically expires on this date and neither party needs to give any notice to terminate the working arrangement.
If the employee wishes to quit before the pre-determined end date, they should submit a formal letter of resignation. However, some employers may include repercussions in their Employment Contract when fixed-term employees terminate the agreement early.
What key terms does an Employment Contract template include?
Employers can clearly describe an employee’s role in an organisation by outlining important terms such as working arrangements, payment methods, benefits, and more in an Employment Contract.
LawDepot’s Employment Contract template gives employers the option to include the following key employment terms:
1. Employer and employee details
Provide the employer’s full name (or company name, if applicable), street address, and contact information. Describe the employee’s details as well, including their name, National Registration Identification Card (NRIC) number, mailing address, and other contact information.
2. Job title, duties, and responsibilities
Provide important details about the employee’s job, including their formal job title, a description of their main duties and responsibilities, their start date, and whether the position is permanent. If the job isn’t permanent, include an end date for the position as well.
Consider addressing other terms that are crucial for an employee starting a new position, such as:
- Where the employee will work
- What days they will work
- How long their work hours will be
- If there is a probation period and, if so, how long it is
Keep in mind that you can update this contract to reflect any changes as the employee gains work experience.
3. Remuneration
Describe the type of remuneration (i.e., financial compensation) being offered to the employee:
- An hourly wage
- A salary
- Commission
- An hourly wage plus commission
- A salary plus commission
Be sure to include how often the employee gets paid. If applicable, you can also address an Annual Wage Supplement (AWS) or any other financial incentives that an employee can earn.
4. Types of leave and other benefits
Establish how many weeks of annual leave the employee can take. Consider giving part-time employees the option to encash their annual leave or public holidays. LawDepot’s Employment Contract template includes provisions for public holidays and other types of leave as well.
Typically, employers should enrol the new employee in the Central Provident Fund. Describe this pension plan and any other applicable schemes that the employer offers.
Certain employees may also be eligible for benefits, such as retrenchment benefits. If these or any other type of benefits apply, you can address them in your Employment Contract.
5. Termination
Specify the minimum length of notice required to terminate the contract. Notice periods may vary depending on the length of employment. LawDepot’s Employment Contract template supplies the statutory minimums in our questionnaire to help inform your decision.
Why is it important to have key employment terms clearly stated in a contract?
Employers in Singapore are required by law to provide an employee with a record of key employment terms (KETs) within 14 days of their start date.
It’s crucial for employees to understand their rights, roles, and responsibilities when accepting a job position. By expressly providing employees with a record of their key employment terms, employers can mitigate the risk of conflicts in the workplace.
Although LawDepot’s Employment Contract covers many of the required KETs in detail, we also give employers the option to attach a separate sheet that summarizes these terms for quick reference. The Ministry of Manpower provides a sample KETs form that you can use to suit this purpose.
What restrictive covenants can I include in an Employment Contract?
A restrictive covenant is a contract term that prohibits employees from engaging in certain behaviour. An employer may reasonably restrict behaviours that they believe could put their company’s success at risk. For example, you can include the following clauses in an Employment Contract:
1. Non-competition clause
Also known as an exclusivity clause, this provision aims to prevent an employee from competing for business with their employer. This term may be in effect while the employee works for the company or for a certain length of time after they leave.
Typically, a non-competition clause prohibits the individual from:
- Giving advice, money, or skilled labour to a competing business or individual
- Directly competing for business as an owner, sole-proprietor, partner, or otherwise
2. Non-solicitation clause
This provision aims to prevent an employee from interfering in the employer’s relationship with other employees or contractors. Any such interference could be damaging to the business. A non-solicitation term may be in effect while the employee works for the company or for a certain length of time after they leave.
Typically, this clause prohibits the individual from:
- Convincing an employee or contractor to quit
- Discussing other employment opportunities with employees or contractors
- Hiring an employee or contractor to work for a competing business
3. Confidentiality clause
Provisions about confidentiality address the fact that an employee may come in contact with sensitive or proprietary information that is the exclusive property of the employer. In this case, the provisions clearly define what constitutes confidential information and how the employee may use this data.
Typically, duties and obligations concerning confidential information include:
- Protecting the information from unauthorized parties
- Disclosing the information to third parties when appropriate
4. Conflict of interest clause
This provision addresses business opportunities that come to the attention of the employee. If the employee becomes aware of a business opportunity, they must inform their employer and get written permission to pursue the prospect. If the employee pursues the job without consent, this could be in conflict with the best interests of the company.
While the other restrictive covenants are optional, LawDepot's Employment Contract template always includes a conflict of interest clause.
