The employment agreement should be executed before the employee begins work, regardless of the type of your contract.
If you update the attached agreement, do not change the at-will wording or incorporate elements that contradict it (for example, references to long-term employment). Nothing in this form or any other writing should contradict your agreement to work at will.
Many wrongful termination claims have been filed because the employee mistakenly believed that his or her employment was for a certain period of time or that they could not be fired without cause.
A non-disclosure provision that is applicable from the beginning of the job and in which the employee promises to keep the firm’s sensitive information secret can safeguard a corporation more comprehensively than one inserted at the conclusion of the partnership. The capacity of a departing employee to utilize sensitive information will remain effective, and you will not have to negotiate with a potentially hostile party to secure this limitation.If you add a condition that restricts a departing employee’s capacity to compete with the firm, be sure the scope and reach of the clause are fair. There must be a relationship between the restriction period and the requirement for the clause. In other words, an employer can only use this provision for as long as it takes to overcome any possible competitive disadvantage.
The provisions of an employee agreement will only bind your employee if you follow them exactly. In other words, provided you do not violate your own commitments under the agreement, you can enforce its provisions against your employee.
Nothing lasts forever, and work is no exception. Your organization should perform an exit interview at the end of an employment relationship, and you should consider including this as a condition in his or her employment agreement. During this discussion, the employee should be reminded of his or her ongoing commitments to the firm, including maintaining the confidentiality of information after the work tenure has ended. You can also take this opportunity to clear up any misconceptions and smooth over any ruffled feathers, perhaps minimizing future termination-related claims.
You must allow the employee time to evaluate the agreement. This reduces the possibility, or at least the efficacy, of a claim that he or she did not grasp any clauses or how they would influence the overall agreement.Both parties should carefully check the final agreement to verify that all pertinent topics have been covered. It is preferable to be too inclusive rather than underly inclusive. If specific expectations or requirements are not explicitly specified in the contract, do not presume that they have been agreed upon. Sign two copies of the agreement, one for yourself and one for the other party.
In Singapore, employment contracts are governed by the Employment Act of 1968.
The guidelines that follow will help you grasp the provisions of your employee agreement provision by provision.
1. Parties are introduced
The paper is identified as an employee agreement. Fill in the effective date of the document (usually the date that it is signed). Identify the parties and, if relevant, the employer’s legal form (e.g., corporation, limited liability company, etc.). It is important to note that each Party is given a name that will be used throughout the agreement. The employer, as you might expect, is the entity who will hire the employee. When the agreement refers to one or both of the persons (rather than no one in particular), the word “Parties” is used.
The “whereas” clauses, also known as recitals, establish the scope of the agreement and provide important background information on the Parties. This part of the Agreement comprises a straightforward declaration of the Parties’ intent to enter into an employment relationship.
Describe in fully the Employer’s business. It should be noted that this description may have long-term consequences for both parties. Other terms in this Agreement limit the Employee’s capacity to compete in the Employer’s industry after his or her employment terminates. If the Employer’s business is defined too broadly, the Employee may be unable to obtain work at all! Ascertain that both parties agree on the business definition presented.
Here is a non-exhaustive list of clauses that you may find in an employee agreement.
Confirms the agreement of the parties to enter into an employment relationship. It should be noted that the position will be “at will.” This implies that either party can terminate it at any moment for any cause.
Enter the commencement date of the emplyee agreement. It should be noted that the partnership has no set “term.” Unless any party terminates the agreement, it will remain in effect.
Establishes the Employee’s compensation and other advantages in exchange for his or her labour.
|➤ The starting salary: Enter the employee's yearly salary as well as a description of how it will be paid (e.g., weekly, bi-monthly, monthly, etc.)
|➤ Non-Salary Advantages: This area allows you to include any additional pay that the Employee could earn
|➤ Vacation: Enter the Employee's annual paid vacation days
|➤ Signing Bonus (Optional): The Employer pay the Employee a certain sum in exchange for consenting to work at the Employer's offices. This might be incorporated in an executive agreement as a bonus for taking a position. If you include this part, provide the amount of the signing bonus and the date it will be paid. It should be noted that if the Employee leaves the Employer within a specified period of time, he or she will be compelled to repay the signing bonus
|➤ Performance Bonus (Optional): Compensates the Employee for meeting specific performance objectives. The Employee's incentive compensation will be computed in accordance with the conditions of the bonus plan established by the Employer. If you wish to include extra stipulations about the Employee's performance incentive, you can do so here
|➤ Stock options (optional): After a set number of years, the Employee may participate in any stock option plan offered by the Employer. Withholding means that the monies paid to the employee may have deductions made from them to meet tax requirements
Describe the employee’s responsibilities as part of his or her work. This should be as precise as feasible for the benefit of both parties. It is critical for the employee to understand what is expected of him or her. For the employer, establishing the employee’s job obligations clarifies what the employer can claim to possess under the work-product theory (which argues that objects developed in the course of the employee’s employment are owned by the employer). Fill in the location of the employee’s services, which may simply be the employer’s primary place of business.
The employee is not permitted to work for other firms throughout the employment period. He or she can, however, invest in other businesses that do not require the employee’s assistance to run.
It suggests that the employee would be provided with some extras to make the workplace more comfortable (e.g., a private office, personal computer, etc.).
If the employee pays for any reasonable costs connected to official employer business (e.g., travel expenses, client meals, etc.), the employer pledges to return that money. The employer promises to produce documentation of payment for these expenditures to the satisfaction of the employer.
During the employment period, the employee is not permitted to disclose any confidential information to other parties without the approval of the employer. Any information about the employer that is not readily available to the public is considered “confidential information.”
This clause is intended to keep the employee from attracting away critical workers or customers from the employer if the employee ceases to work for the employer. The employee may not ask or entice such persons to become employees or clients of the employee. This provision is only valid for a limited period after the employment period has ended. Enter the length of time this limitation will be in effect.
An optional condition stating that the Employee will not engage in any business that competes with the Employer for a specified length of time after the Agreement expires. This provision is subject to strict governmental regulations. Enter the length of time that this non-competition restriction will be in effect. If you decide not to include this part, be sure to update the section numbers and references in the document.
A fidelity bond protects companies against damages caused by their workers’ poor behavior (e.g., theft of company property). If this provision is included, the employee will apply for the bond, and the employer will pay for it.
Specifies the circumstances under which the contract may be terminated. Because this employee contract is for “at will” employment, either party may terminate the agreement by providing the other party with a specific amount of notice. Enter the number of days’ notice required. If the employer so requests, the employee may continue to work throughout this notice period and will continue to be paid until his or her final day of employment.
The employer may employ an optional provision to provide the employee a severance payout. If the employee owes the employer money, the employer is authorized to take that amount from the compensation offered. If you include this sentence, enter the total severance pay (not including any deductions that might be made).
This is a critical clause, and while it may seem apparent to you that corporate property should be returned upon an employee’s departure, it may not be so evident to your employee. As a result, it is critical to establish your return policy in the contract (and to reaffirm it in your employee handbook, departure papers, and severance agreements), notifying employees that they must return all corporate property before leaving your job.
An optional clause that states that if the employee is unable to fulfill his or her tasks for a length of time due to an accident or illness, the employer may lower his or her income by a specified percentage. Enter the length of time (in weeks or months) and the % reduction in salary. It should be noted that the employee will be entitled to his or her full salary whenever he or she returns to work full-time. If the employee is absent for an extended length of time, the employer may terminate the employee contract completely.
An optional provision that compels the parties to resolve any disputes through arbitration (rather than in the courts). Arbitration can be faster and less expensive than litigation for both parties. However, there may be local constraints (or industry limitations) on employing these provisions, so it’s a good idea to research the rules regulating arbitration in your region and in your sector.
This section is a list of the addresses to which any official or legal communication should be delivered. Fill in the postal addresses for both the employer and the employee.
Mergers, acquisitions, and sales of business divisions may occur during the life of a corporation. In such cases, the corporation may assign its contract to a surviving entity or affiliate without the employee’s approval. Simply worded, if the Employer is acquired, the new firm will not be required to rewrite this agreement; it will remain in place as is.
Explains that even if one party allows the other party to neglect or violate a duty under the employment agreement, that party does not forgo any future rights to demand the other party to perform that (or any other) duties.
This provision’s title may appear complicated, but it is straightforward: It stipulates that even if the parties sign the agreement in various locations or using different electronic devices, all of the distinct portions shall be considered part of the same agreement. In a modern world where signing parties are frequently not in the same city, much alone the same room, this clause guarantees that business may be conducted effectively without jeopardizing the agreement’s overall validity.
Protects the agreement’s provisions as a whole, even if one element is subsequently declared invalid.
The second half of this section is optional and explicitly addresses the non-competition and non-solicitation agreements. Because certain sections are delicate and risk being labeled as excessively wide or overreaching, this paragraph permits a court to limit the scope of these clauses rather than removing them entirely.
The parties’ agreement that the document they are signing is “the agreement” on the matters at hand. Unfortunately, including this language will not preclude a party from claiming that other enforceable commitments exist, but it will provide you with some protection against such claims.
It should be noted that the headers at the beginning of each section are intended to help arrange the material. The headers should not be used to interpret the employee contract.