Sep 25, 2017

Essentials of a Contract of Employment | Kingsley Ugochukwu Ani

A contract of employment is necessary whenever a person wants to undertake a position with an employer. But before signing the contract, the employee should endeavor to understand the ramifications of what he is setting his signature to. If possible, such employee should try and understand all the clauses in the contract of employment before signing same. If there are gray areas in the contract of employment, then he should forward same to a lawyer to go through the contract for him with a fine-tooth comb before appending his signature.

A contract of employment is a contract in and of itself, one governing the relationship between the employer and the employee in their dealings with each other.

Ingredients present in contracts of employment
There are certain clauses that should be contained in a contract of employment. There are certain industry-wide essentials that encompass contracts across all spheres of work, and there are certain clauses that are industry-specific, taking into cognizance the nature of Industry, the work expected of the employee, the confidentiality involved alongside the technical expertise, among a host of other considerations.

Mr A is employed as a teacher in a community secondary school. In his contract of employment (if any), the employer cannot just insert a Non-Disclosure clause or prepare a separate Non-Disclosure Agreement. The reason is because of the fact that there is probably no confidential information Mr. A is going to be handling during the duration of his employment. He is teaching students, right?

However, the same will not be applicable in an employment where the employee handles high stakes business for his employer, with attendant secrets which the employer might be worried about.

Clauses in a contract of employment
1. Name of parties and designation: the parties’ names and their designation, whether as employer and employee should be clearly stated.

2. Address of the business: this is the address where the employer carries on business and where the (prospective) employee will work.

3. Commencement date: the date the parties are entering into the contract of employment should be stated too for avoidance of doubt. There might be need too for a termination date if the contract is time-specific.

4. Salary: the remuneration, mode of payment, and regularity, plus other factors regulating the payment of the employee should be set down.

5. Hours of work: this could be stated as 8 AM to 5 PM, etc, depending on the working billable hours of the firm.

6. Non compete clause: this clause is usually inserted for the protection of the interest of the employer in the deal. It can state that within a stated period (which should definitely not be unreasonable) from the date of the termination of the employment of the employee, that he shall not set up a similar business within a particular physical radius from the address of the employer’s business.

7. Copyright: During the duration of the employment of a particular employee, an employee might produce a copyright-able work. This clause might serve to transfer copyright in any work-related, industry-specific work created by the employee, especially if said work was produced using the materials of the employer, on the employer. Or it can serve to share the copyright between both parties. (Employees should be careful of this and try to consult with an intellectual property law expert before agreeing to this).

8. Course of disciplinary action against employee: This will serve to showcase the mode of conducting disciplinary actions against an employee should the employee go against the rules of the employer’s workplace.

9. Overtime: if in the contract of employment, the work periods of the employee is clearly stated, then this will serve to show how the employee can be remunerated for work done by him outside his work periods for the employer’s business.

10. Employee performance review: many employers can insert this clause in the contract of employment of the employee for periodic review of the work performance of the employee. This becomes necessary in a firm which has a hierarchical upward promotion system so as to check whether an employee is due for upward promotion in his work.

11. Ethics: This basically will serve as the code of conduct that the employee is expected to abide by in his work for the employer.

12. Termination of employment; notice of termination: under this particular clause, a lot can go in, including the intention of either party to terminate the contract between them, the notice to be given, remuneration during the period of notice, etc. NB: employers should take particular care in this clause because of the strong laws that exist to protect the interest of the employee against wrongful termination of employment.

13. Vacation: the employer might insert this clause to give employee periods within which he can take leaves from the workplace and still be paid for it; duration, etc.

14. Study Leave: mostly applies to employees working in institutions of higher education.

15. Sick leave

16. Insurance coverage: some employers might be considerate enough to include such clauses that make for mandatory insurance schemes for incoming employees who are not yet covered under any insurance scheme. It can deal with: amount to be remitted from employee’s salary, amount the employer will add, etc.
17. Health coverage

18. Work-related travel: some employers might provide for this, mostly to the effect that they will shoulder the entire expenses to be accrued by the employee.
19. Salary scale

20. Non disclosure clause: will apply to keep the lips of the employee sealed against revealing any confidential information that the employer considers important enough, or what they consider their trade secrets from being revealed by the employees after the employee has left the service of the employer.

The list is basically endless.
There are a lot of clauses that can go into an employee’s contract of employment and these depend on the nature of the work, and in some cases, on the industry the employee is getting into. It can also depend on what the parties want covered.

Point to Note: The employee should be careful so as not to agree to terms that would be considered by an expert as onerous and detrimental to his interests.

Finally, the parties will sign and date the contract, and it will have a binding force of the Law should either of the parties try to renege on the terms of said contract.

About the Author:
Kingsley Ugochukwu Ani is a corporate lawyer with particular emphasis on Real Estate, IT & IP areas of the law. He can be reached on