A good employment contract is beneficial to both the employee and the employer. It spells out the rights and obligations of each party, protects the employee's job security, and protects the employer from certain risks such as the leakage of confidential company information after the employee left.
To draft a good employment contract is no rocket science, here we have prepared a checklist for you to create an up-to-standard employment contract.
1. COMMENCEMENT
We must start everything on the right footing. There ought to be a clause spell out the date when the employee comes on-board.Such provision varies for situations such as if you are about to offering them new terms, or renewal of fixed-term employment contracts.
2. JOB TITLE & DESCRIPTION
In this provision, we should at least have a job title stated on the contract. However, it would be a decent idea to reserve some form of flexibility to allocate other duties to meet business needs.Also, we should set out the reporting line (Superior) for the employee.
3. FULL TIME EMPLOYMENT
If your employee is expected to give their full-time attention during the regular work hours, and not to engage in any activities that might have interest conflict with your business, do state them in the employment contract.However, if you agree to allow the employee to work for another employer while they work with your company, make sure the employee to disclose if there is any, to ensure your business will not be adversely affected.
4. PROBATIONARY PERIOD
The probationary period is a crucial time where you can assess a person if they are suitable for the company or if their performance is up to your expectations.5. HOURS OF WORK/SHIFT WORK
Set out your standard hours/days of work arrangement, break hours or overtime arrangement with overtime pay rate.6. SALARY & ALLOWANCES
In this clause, we will state the necessary employment deductions/allowances or the statutory contributions in the employment contract.7. PLACE OF WORK AND MOBILITY
It is always reasonable to request the employee to mobile to other locations, which might vary from the initial place of work.8. PUBLIC HOLIDAY
Under Section 60D(1) of Employment Act 1955, every employee is entitled to 11 gazetted public holidays throughout the year. It would be great to state what are the public holidays the employee entitled to.9. LEAVE ENTITLEMENTS
Describe how your policy covering the leave treatments, for example, how would you deal with unused annual leave carry forward, long sick leave.10. TERMINATION CLAUSE
The termination clause in the employment contract allows either party (the employee or the employer) to end the employee-employer relationship, but with a given notice period.However, such termination of the employment contract by the employer, must be with ‘just cause or excuse’, as provided under Section 20 of Industrial Relation Act 1967.
11. FORCE MAJEURE CLAUSE
A force majeure clause caters to certain unforeseeable events that would render the parties' obligations under the contract impossible to perform, such as "acts of God", "pandemics", "natural disasters" and "quarantine", depending on how the clause is drafted.12. GRIEVANCE POLICY AND PROCEDURES
Grievance Policy and procedure must be clearly stated in the employment contract to avoid any form of misconduct that leads to the employee’s dismissal.Define the procedure on how you will handle the employee’s misconduct and what are the possible consequences such as disciplinary action.
13. DATA PROTECTION
Data Protection clause is essential compliance under the Malaysian Personal Data Protection Act (PDPA) 2010.Employers must obtain an employee’s consent before collecting and process employees’ data, also notify employees of the purpose of collecting data
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