Employment Contracts: Getting it done the right way (Bonus template included)

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Congratulations! You have finally found the perfect candidate for your role. We’re hoping that you don’t think a few words and a firm handshake between you and the new hire are enough to seal the deal? No matter how small your business is, it’s essential to safeguard your business and your employees with a laid down written contract.

What is an Employment contract? 

An employment contract is written to define the relationship between the employee and the employer legally. Both parties have to agree and sign a written agreement before the new hire can start working.

This document ensures employees follow the company as per rules and regulations. A well-defined contract sheds light on expectations and protects employers in resignation, termination, or salary disputes. 

An employment contract is essential because every action taken in an organisation should always be written and put on paper. An employer can use this document to prevent the employee from using confidential information during and after the employee ceases to work for the employer.

Need some help? Don’t worry; we have got you covered – once you’re done with this article crafting an employment contract can be as easy as a handshake.

Applicable Law

Employment and employment agreements are subject to Federal laws as issues relating to employment and labour matter in Nigeria are within the exclusive purview of the federal legislature.

An employer must give the employee a written contract within three (3) months of the commencement of the employment according to Section 7 of the Act. 

The Federal laws applicable to this agreement include:

  1. Labour Act, 2004.
  2. The Constitution of the Federal Republic of Nigeria, 199 (as amended).
  3. Employees’ compensation Act, 2010.
  4. Factories Act, 2004.
  5. National Health Insurance Scheme Act, 2004.
  6. Personal Income Tax (Amendment Act), 2011.
  7. Trade Disputes Act, 2004.

A written contract of employment must contain the following:

Employer details – Name of the employer or group of employers

Employee details – Name and address of the employee, the date and place of his engagement

The nature of the employment (Internship, Full-time, Freelance, Part-time, Contract, etc) – Some of these details can even include the job description and the team or department with which the employee will work.

Performance expectation and requirements – This section would specifically mention the candidates’ employment role, title, responsibilities, and state clear expectations.

State the date the contract expires – If the contract is for a fixed term, the contract should clearly state timelines.

Probation period details – This section should cover probation period details and critical performance indicators – also terms on which the company will confirm the employee.

Performance reviews – This involves framing an overview of the employee’s performance, work, punctuality, and honest feedback from the senior employees.

The rate of wages/salaries and the manner and periodicity of payment of wages – This section should cover salary agreements and payment timelines – how much and when the employer will pay the agreed wages. It should include the hourly rate or annual salary information about raises, bonuses, or incentives offered to the employee.

Employee benefits – This section should explain what the compensation plan includes — dental, health insurance, quarterly bonus, etc. if offered by the employer.

Any terms and conditions relating to; hours of work; holiday and holiday pay; incapacity to work due to sickness, injury and provisions for a sick day if any and insurance, etc

Define Clear Protocols for Staff Leave, holidays, and exits – This section should contain rules that guide vacation and explain employee expectations regarding sick days, family emergencies, or paid/unpaid leave.

Termination – State the amount of notice each party is required to give to terminate employment. This notice can be based on employment periods or can be at will.

Non-Competition – This clause prohibits the employee from engaging in any activities that directly or indirectly compete with the employer’s business and other clauses based on the company’s work attributes.

Need a template to beat the stress? Simply click this link, and a template will be sent straight to your email!

Eseosa Osayimwen
I create content that builds relationships. Relationships are built on trust. Trust drives revenue.