Permanent Employment Contract

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Overview

Hiring is an important process for any organization, from finding the right person to completing the protocol of enrolling them into your organization’s ecosystem, everything is part of recruitment. It becomes very important for the Human Resource Management team to follow the right procedure so that they don’t miss any pointers, which can prove again the organization or the employees working there. One of the important aspects that they need to follow is the employment contract. There are different kinds of employees in the organization:

  • Fixed term
  • Permanent
  • Casual worker

All these are different kinds of the workforce, but in this article, we will be focusing on permanent employment. It is the most common form of employment, but there is a contract which every organization must-have for their employee. This regular employment contract entails all the aspects of employment like date of hiring, designation, salary benefits, retirement, etc.

Offering permanent employment can be the right solution for any organization because you are assured of having the best talent working for you. But, as an employer, it is imperative that you offer them the right role, job security, and stability.

Let us cover all aspects of permanent employment contracts so that you don’t miss any point while going ahead with permanent staffing.

Before we go ahead, we will be focusing on different types of employment contracts and what exactly is an employment contract.

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What is an employment contract?

Basically, it is a contract that contains all the rights, duties, responsibilities, employment conditions, etc. that make up the legal relationship between the employer and employee.

It contains different terms and conditions which legally bind the employer and employees.

What are the different types of employment contracts?

  • Permanent contracts
  • Fixed-term contracts

Permanent employment contracts- This contract is applicable to employees who work regular hours and are paid a salary or are paid on an hourly rate. You can also count it as a permanent employee agreement. This is an ongoing contract unless the employer terminates the employee or the employee resigns on his own. Any employee hired as a permanent employee is benefited from all statutory rights and employment rights.

Key Features of Permanent Employment Contracts

As mentioned above, a permanent employment contract is a comprehensive document that covers relevant terms of employee's employment. It is important that the regular employment contract covers all aspects mentioned in Section-1 of the Employment Rights Act 1996. It includes the following:

  • Name of the employer and employee
  • Date of start of the job
  • Wages or salary details
  • Hours of work
  • Sick leave
  • Retirement policy
  • Notice period
  • Place of work
  • Job role and KRA

These are the minimum terms which are a must in any employment contract, besides you can also add the following details to the clause:

  • Additional benefits like perks, special allowances, commission, etc.
  • Post-termination restrictive covenants like poaching clients or staff, joining competitors, etc.

Permanent Employment Contract Benefits

There are several benefits of going ahead with a permanent employment contract, a few of them are enumerated below:

  • The employee gets job security and certainty
  • The employment contract contains detailed information about the job role, designation, etc.
  • The permanent employee is subjected to benefits like insurance policies like health, accident, death, dental, life, etc.
  • Another advantage of permanent employment is retirement benefits
  • Job advancement is also an assurance that comes with the permanent employment contract. There is a certain minimum increment that is given to the employee, and this is mentioned in the employment contract.

How soon should the employment contract be signed?

Well, the right answer to this would be as soon as possible. But the maximum extension time for this within 2 months of the employee joining the organization and commencing their role.

Checklist of Permanent Employment Contract

An employment contract is a must, especially if the employer is willing to have a long term association with the employee. It not only talks about the work the employee is subjected to but also entails each and every permanent employee’s right and duty of both the employee and the employer. A permanent employment contract is not just an ethical requirement, but it’s a legal requirement that every organization needs to fulfill when they are hiring permanent employees.

Coming to the checklist of permanent employment contracts, now it can vary from organization to organization based on what they are rendering to their employees. But, here we have brought together general pointers and permanent employee rights that need to be included in the contract.

  • Information that is mandatory in any contract:
    • Name of the employer and the employee
    • Address of the employer
    • Place of work of an employee
    • Designation or title of the job along with job description, KRA, and designation
    • Date of commencement of employment
  • Information about salary and other benefits available to the employee:
    • Salary or wage of the employee
    • Overtime (if the applicable)
    • Information about any other payment to which the employee is eligible
    • Method of payment and wage calculation
    • Additional benefits
    • Pension scheme
  • Kind of Contract:
    • Type- Permanent
    • Notice period in case the employee is terminated
  • Work Hours
    • Number of hours of work per day
    • Alternative work schedule
    • Definition of overtime
    • Staffing
    • Meal and rest period
    • Timekeeping and attendance requirements
  • Leaves
    • Annual leave entitlement
    • Conditions related to taking leave
    • Sick leave and other paid leaves
  • Disciplinary actions
    • Details of disciplinary procedures followed in the country
    • Conditions under which the employer can terminate an employee
  • Grievance Handling
    • Definition
    • Employees' right to union representation
    • Permanent employment contract contains the explanation of each step of the grievance procedure
  • Health and Safety
    • Responsibilities of employee and employer
    • What safety measures are there in the organization and what protocol the employee must follow
  • Confidentiality
    • Details of a confidentiality agreement
    • Use and misuse of electronic communication and the internet
  • Probation Period
    • Purpose and definition
    • Benefits that employees will get as per the permanent term employment contract
  • Evaluation of Performance
    • Criteria for evaluating performance
  • Retirement Policy
    • This part of the contract mentions the retirement policy followed by the employer
  • Uniform
    • Provision of uniform for employees
  • Acceptance
    • The employee agrees to the pointers mentioned above and other conditions specified by the employee. Make sure that you read the terms and conditions of the contract thoroughly.

FAQs

An employment contract is a legal requirement that every employer needs to fulfill. This contract is issued as soon as a new employee joins the organization. The maximum timeline to sign this contract should be within two months of joining the organization. All the details pertaining to employment are mentioned in this contract.

An employment contract is a must for any organization, and it starts as soon as the employee starts working in an organization. So, it is a must irrespective of any kind of documentation you have with you.

This document contains all the statements, permanent employee rights and key terms to which the employee adheres to stick by, and this signed documentation ensures that the employer also adheres to their promises. This contract includes pay, working hours, appraisal, increment, etc.

Employment contracts contain all the terms and conditions that the employee and the employer need to fulfill. It is a kind of permanent employee agreement between the employer and employee. The conditions of contract may vary from one organization to another, but there are certain generic terms which remain the same, here are a few of them:
  • Name of the employer and employee
  • Date of start of the job
  • Wages or Salary details
  • Hours of work
  • Sick leave
  • Retirement policy
  • Notice period
  • Place of work
  • Job role and KRA

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