Employment Contract: What You Need To Know

An employment contract is, in essence, an agreement of a contract of service between a company and its potential employee. This agreement dictates your relationship with your employer and lays out the duties of responsibilities of both the employer and employee. This agreement can be made in writing or verbally, and the terms of the agreement may also be express or implied. However, to curtail potential disagreements, it is best that an employment contract is made out in writing.

A well-drafted employment contract would typically include the following:

–                Appointed position

–                Expected duties

–                Date of employment commencement

–                Hours of work

–                Salary

–                Notice period

The Employment Act in Singapore

Most employment contracts in Singapore must adhere to the Employment Act. Terms set must meet or exceed the minimum standards stipulated in the said Act. Terms present in the employment agreement that do not meet these standards will be void and illegal.

On 1 April 2019, the Employment Act further expanded its reach to cover managers and executives who earn above $4,500 per month. In essence, the Employment Act now covers a fair majority of all employees working under a contract of service in Singapore besides seafarers, domestic workers and statutory board employees or civil servants. The Act provides a comprehensive outlook of who exactly comes under the purview of the Act. In the event, an employment contract in question is covered by the Act, but the employer enters into a contract that does not adhere to provisions in said Act, the employer will be found guilty of a criminal offence which is punishable with a fine of up to $5000, up to six months in prison, or both. Repeat offenders could face fines of up to $10 000, up to 12 months in prison, or both.

Furthermore, there are also legal requirements mandatory to every employment contract in Singapore that cannot be contracted out whether or not an employee comes under the scope of the Employment Act – these include mandatory contributions to an employee’s Central Provident Fund (CPF) and maternity leave. It is, therefore, essential for employers to ensure that employment contracts are compliant with the Employment Act and for employees to make certain that safeguards that the Employment Act have put in place are being complied with by employers.

When does an employment contract take effect?

The Employment contract takes effect once a new employee turns up for work on the agreed starting date. If the potential employee does not begin work on the said date, the Employment Act will not apply as the employer-employee relationship cannot be said to have begun. The employer also will not be able to claim notice pay or any compensation in accordance with the Act, and the only recourse available to the employer will be through a civil claim.