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A new feature on Ideate: Small Business HR and Employment

by Claire Stewart on 07/08/07 at 2:23 pm
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We are pleased to announce that we have a guest writer on Ideate. Claire Stewart, HR consultant and owner of the national HR agency PeopleWise, will be contributing a monthly segment called Small Business People and Employment. Claire lives in Durban and has been consulting to South African businesses for over a decade. Her skills and candour are much needed in a small business environment that is famous for confusing policies.

The first article appears below. Feedback and suggestions are welcome.

The Golden Rules of Employment Contracts.

An employment contract is one of the most important documents your organisation should have in place.

Every business should have signed employment contracts between the organisation and each of the employees. These lay the ground rules between the parties. They let employees know exactly what is expected from them and what they can expect, and provide a reference document on a wide variety of issues. Without an employment contract in place employers and employees will be deemed to be bound by the Basic Conditions of Employment Act and the Labour Relations Act- not an ideal situation as employers can get so much more protection and benefit out of a good strong employment contract. There are some important factors to bear in mind when drawing up employment contracts:

1. KISS (Keep it Simple Stupid) – don’t use convoluted legal speak. Use concise, simple English (and, if necessary, Zulu or Xhosa) that both parties will understand.

2. Make sure your new employee signs the contract BEFORE they start work – once they’ve started work they can’t be forced to sign the contract and you might have to negotiate tricky clauses e.g. restraint of trades.

3. If your employees haven’t signed contracts, don’t despair - put them in place then sit down with your employees and work through them together. Ensure this is done in a relaxed non-threatening environment with the emphasis put on the mutual benefits of both parties formalising their rights and responsibilities, and that the organisation is focussing on ensuring that they are legally compliant.

4. Don’t forget contracts for fixed term employees (and remember to get new ones signed once the term is reached - put a reminder in Outlook!) and Independent Contractors- vital in protecting your business from these individuals potentially stealing your clients, staff, trade secrets or methodologies.

Things you should look at including in employment contracts for permanent staff:

1. Probationary periods - usually three months in duration. This ensures that you can terminate the services of unsuitable new employees quickly and efficiently (note, you cannot just tell them to pack their bags and get out, there is a process that must be followed).

2. Conditions of employment:

a description of duties with the proviso that the organisation can require the employee to undertake other duties within reason- so no ‘its not in my job description’ issues.
b. working hours and breaks (including smoke breaks)
c. remuneration – monthly payment date, amount, method of payment, relevant deductions and any extra provisions such as commission, petrol / cell phone allowances,
d. benefits – annual leave (usually 15 days but can be increased especially for senior staff or long service staff); sick leave (with provisos for investigating excessive or suspicious sick leave), family responsibility leave, annual bonuses, annual increases, medical aid, retirement funding if applicable.

3. Protection clauses for the employer:

a. exclusive service – ensuring your employee only works for you unless you give them written consent
b. trade secrets and confidentiality – ensuring your confidential information, methodology, marketing / expansion plans, new contracts/ clients say exactly that- confidential.
c. ownership and / or copyright- ensuring that any materials, programmes, systems etc that are developed by the employee while he/she is employed by the organisation is solely owned and copyrighted by the organisation.
d. non-solicitation of clients/ fellow staff members- don’t worry, we’re not talking about your employees setting up a red light zone but ensuring that ex-employees don’t steal your clients, potential clients and fellow staff members!
e. restraints of trade- these are only applicable for key members of staff where it would make a difference if they started up a competitor business / worked for a competitor in reasonable proximity to your business. You need to look at these carefully.
f. electronic communications proviso- to stop abuse of e-mail, internet; allow you to access employees e-communications and instigate appropriate discipline in the case of employees accessing porn sites, downloading inappropriate or huge amounts of data etc.
g. termination- usually one calendar month but you can make it longer in the case of key employees that you are going to battle to replace and train up new employees.

And finally… Don’t forget to get both parties to sign, date and witness and put the original copy on the employees file. You would be surprised how often this step is missed and it negates everything mentioned above!

Claire Stewart is the founder of PeopleWise, an HR and Employment consulting service. Like Neo in the Matrix, Claire sees through the convoluted mess of SA employment law and makes sense of it for you, loyal Ideate reader. View more articles by Claire Stewart.

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