Should I Hire a Lawyer to Review My Employment Contract?

14.06.2024
Jeremy Cheong
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Jeremy Cheong

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+65 8800 8074

An employment contract is a legally binding agreement between an employer and an employee that sets out the details of an appointment. It will cover things such as a probation period and include a description of the job, including responsibilities and remuneration. It will also reference benefits like holidays, sick pay, and bonuses. There should be clauses covering the termination of the contract by the employer and the employee.

An employment contract can also include other terms and conditions. These can be referenced in the document, but are also set out elsewhere in more detail, such as in an employee handbook or policy document.

An employment contract defines the relationship and expectations between an organisation, its employees, and protects the rights of both parties.

The Employment Act

The Employment Act defines employer/employee relationships. It provides a minimum set of standards to protect employers and employees. It also offers a helpful framework for employers to draft legally compliant employment contracts.

Many contracts go beyond the provisions of the Employment Act and provide additional detail and requirements. However, an employment contract must not contradict or fall short of the legislative provisions.

What should I expect to see in my employment contract?

Basic information should include the employer’s full name, the title of the job or role, and the date the employment starts.

The job should be set out in sufficient detail and reflect the information in the initial advertisement conveyed to you, and throughout the recruitment process.

It’s essential that enough information is present to define the scope of the role; for example, if that particular job includes anti-social hours or foreign travel, but you have agreed your position will be based entirely in Singapore, then this should be clearly stated in the contract.

The salary and any bonuses or pay for overtime or holiday rates should be accurately described. If exact figures are not provided, then the amount should be expressed as a percentage or proportion of another clearly defined figure, for instance, an annual bonus to represent 5% of gross salary, which is stated.

The salary period should be defined – usually weekly, bi-weekly, or monthly with a description of the payment method, whether bank transfer or cash.

Employment contracts specify standard working hours; anything outside of those would be considered overtime but may not be reimbursed as overtime, depending on the nature of the position, and the specific contract wording. Working arrangements may involve a mix of site-based, totally remote, or hybrid work. If the role is hybrid, the employer should set out the minimum amount of time they expect the employee to attend their premises.

In addition to salary and other financial benefits like bonuses, there will be other employee benefits such as sick leave and sick pay, as well as other leave, including annual, maternity/paternity, and compassionate leave. There may be pension rights, medical benefits, and life insurance cover after a qualifying period, although these can sometimes depend on status and seniority.

Most employment contracts include a probationary period, which allows the employer to assess the new employee’s performance and evaluate the working relationship. Probationary periods can be a month, three months, and even longer for some senior positions. The probationary period may not attract full employment rights, so the contract should be clear on this point. Often, full employee benefits do not commence until permanent employment is confirmed. A section should explain how the evaluation will work during the probationary period.

Some aspects of employment may be covered in a staff handbook, such as grievance procedures, disciplinary protocols, termination of employment, and redundancy. The employment contract can refer to these, but these documents must be read alongside the main agreement, as the contract will also bind you to these terms.

Any employment contract in Singapore must adhere to the concept of a fair dismissal. This involves giving the correct notice period as stated in the agreement, based on length of service and seniority, and clearly documenting the reasons for dismissal.

Red flags: Things you don’t want to see in your employment contract

Depending on the role and its seniority, some employment contracts may contain clauses that are either wholly unwelcome or may require some negotiation between the new employee and a potential employer. One of the most common of these is restrictive covenants.

An employment contract often includes clauses to protect trade secrets and sensitive business information. These clauses essentially limit what an employee can do during their employment and often for some time after they have left. These clauses are called restrictive covenants, and there are different types: non-compete, non-solicitation, and non-disclosure.

These terms can limit an employee’s ability to work in specific geographical areas or industries after leaving this role, so it’s essential to review them thoroughly; professional advice may be necessary. The clauses must be proportional to the sensitivity of the information and the potential risk to the employer’s business, and there is room for negotiation if this is not the case.

Reasons why a lawyer should review your employment contract

  • To ensure the terms and conditions are compliant and do not fall short of the requirements set out in the Employment Act.
  • To check that all the correct details are present and clearly defined.
  • To clarify and resolve ambiguities that an employer could use to disadvantage an employee purely because the wording is vague.
  • To negotiate any red flag clauses such as non-compete agreements and restrictive covenants.
  • Review the terms and conditions that cover employer/employee disputes and the mechanisms for resolution without contract termination. These should be clearly detailed and not weighted in favour of the employer.
  • Ensure that penalties for breach of contract are balanced, proportionate, and fair.
  • Check that the provisions for termination of the contract by either the employer or the employee are valid under the Employment Act. For the employer, this includes redundancy and restructuring, employee misconduct, usually defined in a staff handbook or other documentation, and a satisfactory probation period. An employee should be able to terminate for breach of contract terms by the employer, unsafe working conditions, or non-payment of salary.
  • Verify that dismissal clauses adhere to the Employment Act’s provisions.
  • Confirm that employee rights are protected after termination, including paying all salary owing and bonuses within the stated salary period, and extending certain medical benefits that continue to even after the contract has ended.
  • Confirm that mutual agreement is necessary to alter the contract in the future and identify the circumstances in which this is permissible.
  • Review the contract in light of the specific industry and role, which may have given rise to the need for specific and unique clauses to protect the employee.

Differences for Singaporean and foreign workers

There is an extra layer of detail for foreign employees who require permits to work in Singapore, usually the S Pass or Employment Pass. Any employment contract should reference this, and there will be clauses surrounding application, validity, and renewal, commonly placing the onus on the employee to ensure they comply.

Employment contracts for foreign workers often include terms regarding repatriation to the employee’s home country once the contract has been completed (if it has a fixed duration) or when the agreement is terminated. This is to ensure that the employer cannot be held liable or accountable if a former employee remains in Singapore illegally.

Foreign employees may see benefits in their contracts that local workers won’t have, like housing allowances or relocation packages. Some employment agreements also refer to taxation, as the employer will want to ensure compliance with Singapore’s tax laws by foreign nationals.

Final thoughts

Like any contract, the devil is always in the detail. A thorough review by an employment lawyer can highlight areas of ambiguity or poor drafting in your employment contract. These can be the subject of negotiations once a job offer is secure and help protect your position before you sign on the dotted line.

Employees must know where they stand and feel they can rely on the contract terms if required. Unfortunately, it is often the case that problems with employment contracts only become apparent during a dispute, and it’s much more challenging (and more expensive) to argue the point. Clear contracts reduce the potential for conflicts and should make it easier to resolve problems when they do arise.

Jeremy Cheong
Author

Jeremy Cheong

WhatsApp

+65 8800 8074

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