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Getting it right with employment contracts

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Good relationships between employers and employees hinge on trust and confidence. This involves having a clearly drafted employment contract which reflects the strategies in the company’s policies as well as the approach in the hiring process.

A clear and well-written employment contract helps employers establish a trusting relationship with employees. With clear employment terms being listed, it allows both employers and employees to have a better and clearer understanding of their rights and obligations.

With the population of the professionals, managers and executives (PMEs) increasing by about 20% over the past decade, it is critical for employers to know how to manage the employment contracts for PMEs fairly to avoid disputes such as salary arrears and payment of unconsumed leave. These issues should be clearly worded into the employment contract to minimise disputes.

So, what are the common disputes between employers and PMEs? Let’s take a look at the common issues that both parties should note:

• Dismissal/termination-related issues• Notice period issues• Annual leave• Public holidays• Salary payments• Sick leave

Employers should consider the following practices which should be clearly stated in the employment contract and/or HR policies:

Basic practices

• Dismissals/terminations, notice period

– Decisions on dismissal/termination should be made only after adequate warnings have been given to the employees in question and in the case of misconduct, an inquiry must have been held.

– Employers should provide due notice to the employee or payment in lieu of notice should the employee’s contract be terminated.

– The notice period should be the same for both employers and employees, and either party would have the option to terminate the contract by serving notice.

– If an employee is dismissed on grounds of misconduct or the contract is terminated, employers should pay the affected employee their final salary on their last day of employment or within three working days from the date of dismissal.

– For employees who have left employment without notice or serving the required notice period, the final salary should be paid within a week from the last day of employment.

• Annual leave

– Employers should provide a reasonable leave eligibility to the employees.

• Public holidays

– Employers should state in the contract the entitlements and the arrangement for work done during the 11 gazetted public holidays.

• Salary payments

– Employers should pay employees their salary at least once a month and within a week after the end of the salary period.

– Employers should ensure that the contract states when the salary is paid, when the salary should be paid upon termination and the components of the employees’ salary.

• Sick leave

– Employers should note that sick leave is a basic provision and should be provided and clearly stated in the employment contract.

Further considerations

• Dismissals/terminations, notice period

– As poor performance can be a common reason for termination, employers can 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 assist employees in improving their performance.

– The notice period should be of reasonable duration, depending on the job levels of the employees.

• Annual leave

– Ensure that you have a comprehensive policy on annual leave for clarity on application and utilisation of leave. –

Employers are encouraged to allow encashment of their unconsumed leave at the end of the employee’s employment.

– Employers are encouraged to allow employees to carry forward their leave for at least a year.

• Public holidays

– 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.

• Salary payments

– Employers are encouraged to design competitive salary structures which will attract, motivate and retain.

• Sick leave

– 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.

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

For a start, employers can: Set down clear guidelines and processes in a handbook or have it accessible on the intranet. Tap on Tripartite Alliance for Fair and Progressive Employment Practices’ resources:

• Workshop: Overview of the Employment Act. 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.

• Guidelines: Tripartite Guidelines on Fair Employment Practices. 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, employees or employers 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.

Photo / 123RF

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