Reading and understanding the employment contract before you seal the deal is crucial as this will avoid any potential disputes.
A fair employment contract clearly states your rights and obligations as an employee of the organisation as well as the employer’s, and as required by the Employment Act, should include the key employment terms[1].
While organisations’ practices may vary, this article aims to serve as a guide on the key points (non-exhaustive) to look out for when signing an employment contract.
1. TYPE OF CONTRACT
Is the position a permanent one or a contract where you will be employed for a fixed duration?
Regardless, all contracts should clearly indicate the start date of your employment. If you are on fixed-term employment, the contract should also state the duration and the end date of your employment. You should also check if the contract can be renewed or extended, and the conditions for renewal or extension.
Look out for any other terms and conditions your employment is subject to, such as those listed in the employee’s handbook, and request a copy when starting work.
2. DETAILS OF THE JOB
One might think that job requirements are clear at first glance. However, it is important to check that the job title and the description of the main duties and responsibilities in the contract are exactly what were communicated to you during the job offer. If in doubt, do clarify with the potential employer.
Pay attention to other aspects of the job, work conditions or performance targets that may be stated in the contract.
3. WORKING ARRANGEMENTS
The employment contract should include your place of work, the daily working hours and number of working and rest days per week. For instance, will you be working a five- or six-day work week? If you are required to work on shift, what are the typical shift work hours, and do you have sufficient break time and rest days?
Did you know?
If you are covered under Part IV of the Employment Act[2], your hours of work are regulated and you are entitled to breaks, overtime pay and rest day. You are generally not required to work for more than six consecutive hours without a break. However, if the nature of work requires you to work continuously for up to eight hours, breaks must be provided for meals and should be at least 45 minutes; and you should have one rest day per week[3].
4. SALARY, BONUS AND REIMBURSEMENT
While you may have negotiated and agreed on the salary when an offer is made, you should still check that the agreed amount is accurately reflected in the contract. Other information to look out for include:
- What is the frequency of salary payment? Are there any payment conditions on any particular salary elements such as allowances?
- What is the overtime rate of pay and frequency of payment, if applicable?
- What is the commission structure like, if applicable?
- Are you entitled to any bonuses, annual wage supplements and other incentives?
- Are you entitled to any reimbursements of expenses incurred for work (g. travel expenses incurred during employment)?
Did you know?
If you are covered under the Employment Act[4], your employer must pay your salary at least once a month and within seven days after the end of the salary period. Some exceptions include overtime pay and resignation without notice[5].
5. LEAVE AND OTHER BENEFITS
Your employment contract should state the following:
- Number of days of annual leave you are entitled to;
- Policy on carrying forward your annual leave and how unused annual leave is treated upon resignation or termination;
- Public holidays (e.g. Are you given a day’s pay or a day off if you work on a public holiday or the public holiday falls on a non-working day?);
- Maternity, paternity and childcare leave entitlements, if applicable;
- Medical benefits, sick leave and hospitalisation entitlements.
Did you know?
In accordance with the Employment Act, you are entitled to paid annual leave and sick leave if you have worked for your employer for at least 3 months[6]. The Act stipulates the minimum leave entitlements and those beyond what is stated in the Act will have to be mutually agreed between the employer and employee, and documented in the employment contract[7].
6. PROBATION PERIOD
Probation period is a common practice and usually lasts for three to six months or longer depending on the complexity of the role and industry. It gives both you and your employer the opportunity to assess suitability and job fit in the job role and company culture. Employees assessed well after the probation period will be confirmed and those who are not may have their probation period extended.
Do check:
- What is the duration of probation if any?
- How will you be assessed during the probation? Typically, companies will review your performance and issue a confirmation letter upon completion of the probation.
7. TERMINATION
Either you or your employer can end an employment relationship by terminating the contract. In your contract, look out for:
- The requisite notice period for termination of contract for both you and your employer, before and after confirmation of employment.
- The option to terminate the contract by paying salary in lieu of notice.
- Restraint of trade clauses restricting your employment in a similar position in other companies or industry when you leave the company.
- Other penalty clauses (e.g. for early termination of contract).
If there are other penalty clauses, always clarify what these are and how they will be administered. Do not sign the contract if you are uncomfortable with the employer’s explanation.
Did you know?
The length of notice period must be the same for the employer and employee. If there is unequal notice period or no prior agreement between your employer and yourself, the notice period in the Employment Act will apply, and it will be based on length of service[8].
So before you sign the next contract, check the terms and conditions to ensure you fully understand them and they meet the minimum requirements of the Employment Act (if you are covered), clarify when in doubt, and capture all agreed terms in the contract to avoid potential disputes.
If there are any terms, they should not be included in the contract. For more information on employment contracts, visit tafep.sg or mom.gov.sg.
If you need assistance on employment disputes, you may approach the Tripartite Alliance for Dispute Management for advisory and mediation services[9].
For employers who need advice on how to apply the Employment Act, Advisories or Guidelines, you may contact the Employer Advisory Service (paid services[10]. ⬛
1 See: Ministry of Manpower (MOM). What is a contract of service. Available at: https://www.mom.gov.sg/employment-practices/contract-of-service/what-is-a-contract-of-service
2 Employees covered under Part IV of the Employment Act include workman (a rank-and-file employee engaged in manual labour e.g. cleaner) earning basic salary of not more than $4,500, and non-workman (a rank-and file white-collar employee e.g. clerk and receptionist) earning basic salary of not more than $2,600. Managers and executives are not covered under Part IV of the Act. See: MOM. Employment Act: who it covers. Available at: https://www.mom.gov.sg/employment-practices/employment-act/who-is-covered
3 See: MOM. Hours of work, overtime and rest day. Available at: https://www.mom.gov.sg/employment-practices/hours-of-work-overtime-and-rest-days
4 All employees, except foreign employees holding a work pass, seafarers, domestic workers and public officers, are covered under the Employment Act. See: MOM. Employment Act: who it covers. Available at: https://www.mom.gov.sg/employment-practices/employment-act/who-is-covered
5 See: MOM. Paying salary. Available at: https://www.mom.gov.sg/employment-practices/salary/paying-salary
6 See: MOM. Employment Act: who it covers. Available at: https://www.mom.gov.sg/employment-practices/employment-act/who-is-covered
7 See: MOM. Leave. Available at: https://www.mom.gov.sg/employment-practices/leave
8 See: MOM. Termination with notice. Available at: https://www.mom.gov.sg/employment-practices/termination-of-employment/termination-with-notice
9 See: Tripartite Alliance for Dispute Management. About us. Available at: https://www.tal.sg/tadm/about
10 See: Tripartite Alliance for Fair and Progressive Employment Practices. Contact us – Get Advice on the Employment Act or Relevant Labour Laws, Advisories or Guidelines (Paid Services). Available at: https://www.tal.sg/tafep/Contact-Us
The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) helps employees are respected, valued and able to achieve their fullest potential, for the success of the organisation. Employers can approach TAFEP for tools, resource materials and assistance to implement fair and progressive practices at their workplaces. Employees or individuals who encounter workplace discrimination or harassment can seek assistance and advice from TAFEP. For more resources and events from TAFEP, visit tafep.sg.
