The Perfect Employment Contract: Content and Structure
The Perfect Employment Contract: Content and Structure
An employment contract is more than a formality. It's the foundation for the relationship between employer and employee – and your most important document if disagreements arise. Yet we often see contracts missing essential elements or so unclear that they create more problems than they solve.
Here's what the perfect employment contract should contain.
The Mandatory Elements
Employment legislation requires employers to inform employees in writing about essential terms. The obligatory information includes:
1. The Parties
Employer's and employee's names and addresses. It sounds basic but is surprisingly often missing.
2. Workplace
Where will the work be performed? State a fixed address, or describe if there are changing workplaces or options for remote work.
3. Title and Job Description
Job title and a description of the nature of the work. Be specific enough to avoid misunderstandings but flexible enough to cover normal changes.
4. Start Date
When does employment begin? Also state the seniority date if it differs from the start date.
5. Salary and Benefits
Fixed salary, pension, bonus, employee benefits, and other allowances. Also state payment date – typically in arrears monthly.
6. Working Hours
Normal weekly or daily working hours. For varying working hours, describe the principles for scheduling.
7. Holiday and Days Off
Right to holiday under holiday legislation and any additional days off. State holiday year and accrual principles.
8. Notice Period
Mutual notice period for both parties. Be clear about the applicable terms for different lengths of service.
9. Collective Agreement
If the employment is covered by a collective agreement, it must be mentioned by name.
10. Probation Period
If a probation period is agreed, state duration and terms – including shortened notice period.
Beyond the Mandatory
The mandatory elements are the minimum. A good employment contract should also address:
Confidentiality
A confidentiality clause protects the company's trade secrets, customer information, and internal processes – both during and after employment.
Non-Compete and Customer Clauses
If relevant, you can restrict the employee's ability to work for competitors or contact customers after leaving. Note the strict rules governing such clauses.
Intellectual Property Rights
Who owns what the employee creates? Typically, inventions and works created during working hours belong to the employer, but this should be clearly stated.
Side Jobs
May the employee have side jobs? Many contracts require prior approval to avoid conflicts of interest.
IT and Equipment
Does the company provide computer, phone, or other equipment? What are the rules for private use?
Structure: How to Build the Contract
A well-structured contract is easy to read and leaves no doubt.
1. Introduction
The parties and basis of the agreement.
2. The Position
Title, workplace, job duties, and reporting line.
3. Salary and Benefits
Everything about pay, pension, and employee benefits.
4. Working Hours and Holiday
Hours, flexibility, and holiday rights.
5. Duration of Employment
Start date, any probation period, and termination terms.
6. Other Terms
Confidentiality, clauses, intellectual property rights, and other matters.
7. Signatures
Fields for both parties' signature and date.
Common Mistakes to Avoid
Many employment contracts suffer from unclear job descriptions creating expectation gaps, outdated clauses copied from old contracts, failure to update when legislation changes, and unbalanced terms that may be invalidated.
Review your templates annually and ensure they reflect current legislation.
Digital Signature on Employment Contracts
With ePact, you can send employment contracts for digital signature with MitID. The employee receives the contract, reads it through, and signs – all digitally. You get a legally valid agreement with full audit trail, ready for archiving.
The process takes minutes instead of days, and you avoid printing, scanning, and physical archiving.
The Bottom Line
An employment contract should be clear, complete, and legally sound. It protects both parties and creates a solid foundation for the collaboration.
Use a well-crafted template, keep it updated, and get it signed digitally with ePact. Because a good employment starts with a good contract.
