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Human Resource Administration – Importance of the Employment Contract

The employment contract is a necessity for every employer and employee. It is a well-documented agreement that legally binds and protects the parties involved.

What is the importance of an Employment Contract?

  1. Ensures job security for employees and labour certainty for employers.

The employment contract outlines the validity period of the contract which ensures job security for the staff. The staff will also be aware of what is expected of them, and the employer is positive that they will not leave as long as they do not violate the employment contract terms.

  1. Defining designation and duties.

The employment contract defines the position and duties of the staff which assures the staff of his/her daily tasks which are formulated through a job description. It will outline expectations of good performance with the aim of tracking and improving the company’s overall productivity.

  1. Management of leave.

Employment contracts will outline the various types of leave and public holidays that an employee is entitled to while working in the company as stipulated by employment laws. This will help in maintaining the regular flow of work by planning schedules to help utilize the leave days.

  1. Dispute Resolution

A good employment contract will define all the terms of employment and will leave no room for ambiguity or future misunderstandings. This ensures that neither party will have an upper hand over the other in the event of a dispute and minimizes the time and expense of a courtroom battle.

  1. Protects the integral aspects of the company.

The employment contract includes clauses on intellectual property rights, confidentiality, noncompete, and non-solicitation that protect the company’s interests. The purpose of contract management in employment is to prevent employees from setting up rival organizations, poaching staff, stealing valuable trade secrets, reclaiming accidental overpayments, and effectively managing contractual obligations.

Virtual Human Resource Services Limited ensures that employment contracts are aligned with labour laws and benchmarked with common human resource best practices. This ensures a harmonious relationship between an employee and an employer and minimizes the risk of litigation.


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