The most important provisions of a legal employment contract
What is an employment contract?
The employment contract is a formal document that sets out the terms and conditions of employment, detailing the rights and obligations of the employer and the employee. Its primary purpose is to clarify the legal position of both the employee and the employer during the period of employment and in case any problems arise. By referring to the terms and conditions set out in the employment contract, any misunderstandings that may arise in relation to the employment, remuneration or even severance pay can be avoided. It is important to know that an employment contract based solely on a verbal agreement, i.e. one that is not drawn up in writing, is invalid. However, if employment is based on an oral agreement, the employee can still rely on this for the first 30 days.
What are the mandatory elements of an employment contract?
The employer’s company details and the employee’s personal details:
- The employer’s name, address, tax number, etc.
- The employee's name, address, date of birth, etc.
The base salary and other elements of remuneration:
- The base salary and additional elements of remuneration for work, detailing the conditions under which the employee receives his/her pay.
The Employee’s position:
- It describes exactly what tasks the employee is responsible for and what position he/she holds at the company.
The duration of the probationary period:
- It specifies the period of time during which both the employer and the employee can decide if the employee and a position are a good match.
The term of the employment:
- It specifies the length of the employment relationship. If not specified, the employment is for an indefinite term.
The place of work:
- If the place of work is not clearly specified, it is considered to be the place where the employee usually works.
Whether the employment is full-time or part-time:
- Unless otherwise specified, it is assumed that the employee works in full-time employment.
If the employment contract contains at least this information, the rights and obligations of the parties will be clear in most cases.
What information elements should be included in an employment contract?
Employers are obliged to inform employees in writing within 15 days of the following important information relating to their employment contract:
- The daily working time: How much time the employee is expected to be at work daily.
- Remunerations and other benefits above the base salary: What other remunerations and benefits the employee is entitled to in addition to the base salary.
- Payroll accounting: How the salary is calculated, when and how often it is paid, as well as the exact date of payment.
- Leave days and how they are issued: How many days of leave the employee is entitled to, how it is calculated, and the rules for issuing leave days.
- Rules applicable to the notice period: What conditions apply to dismissal and resignation, and how long the notice period should be before the employment is terminated.
- The scope of the collective agreement: Whether the employer has a collective agreement in place and what specific provisions apply to them.
- The person exercising employer’s rights: Who is entitled to exercise the employer’s rights?
Important note: The employer is not obliged to provide such information if the duration of the employment relationship is one month or less, or the working time is eight hours per week or less, i.e. in the case of short-term or part-time employment, detailed information may not be provided. Nevertheless, these elements can be included in the employment contract, and it is worth asking for such information even if the employer is not legally obliged to provide it.
Why is it a problem to work without an employment contract?
In some cases, in order to avoid taxes and obligations, the employee and the employer choose to work without a written employment contract (and rely instead on a verbal agreement) to establish the employment relationship. However, as a consequence, it is not possible to prove the existence of an employment relationship. With a view to this situation, the Labour Code has introduced a rule to protect workers.
This rule states that an employment contract that is not in writing is invalid, but the employee can still rely on such an agreement within 30 days on starting work. This means that even if the employment is based on an oral agreement, the law protects workers by this rule so that they can assert their rights and to ensure that their employment is officially recorded for the purpose of calculating service time.
It is recommended that employees avoid jobs without a written employment contract, even if they seem more financially attractive in the short term.
Amending the employment contract- Is it possible? Is it legal?
Both the employer and the employee can take the initiative to change provisions of the employment contract. Changes in various aspects of life, for example, having children or a change in family situation, can also lead to such a situation. For example, a mother on maternity leave may return to work in part-time employment. It is important to note that the employment contract can only be amended in accordance with the provisions of the Labour Code and both parties must comply with these provisions.
5+1 things to pay attention to before signing an employment contract
1. Remuneration and benefits:
- Check the elements of remuneration and other benefits offered (e.g. cafeteria, bonuses, etc.).
2. Position and responsibilities:
- Make sure that the positions and its responsibilities match your expectations and skills.
3. Working hours and flexibility:
- Understand expectations regarding working hours, including overtime.
- If flexibility is important to you (e.g. home office), it is worth discussing these options.
4. Place of work:
- Be clear about where you will be working. This may be particularly important if remote working or travel is an option.
5. Conditions of termination:
- Review the terms and conditions applicable to the termination of the employment contract by either of the parties.
- Understand with what notice period and under what conditions the employer or you may terminate the employment.
+ 1 Other terms and conditions:
- Look at other conditions, such as holidays, sick leave, training opportunities, etc.
- Look out for any confidentiality and non-compete clauses.
What should a company pay attention to in order to draw up a legal employment contract?
When drafting a legal employment contract, it is important that it is adapted to the labour laws and regulations of the country in question. Mazars’ experts have over 30 years of experience in drafting employment contracts, so our clients can be certain that these documents are legally compliant!