Employment contract

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Employment contract is an agreement to the terms and conditions of employment – agreed by both the employer and employee. In principle, a contract is created as soon as a person agrees to work for the employer whom may have previously outlined the conditions of employment.

Employers and employees are free to negotiate and agree on the terms and conditions of employment (with reference to a company’s own system of compensation and benefits) provided that these terms do not violate the provisions of the Employment Ordinance (EO). If in doubts, they should consult legal advice.

In accordance with the EO, employers are required to provide employees with a copy of their written employment contract. In addition, employers should also consult their employees and obtain their consent before making any subsequent change to the terms of the employment contract.

Employment contract structure

  • Names of both the employer and employee
  • Starting date of the employee
  • Job title and description
  • Address of the workplace(s)
  • Details of pay – hourly rate/salary and when it is paid (weekly/monthly)
  • Hours worked each week
  • Holiday entitlement
  • Sickness entitlement
  • Details of any pension schemes
  • If the employee is to work overseas – the period that they will work overseas and the currency in which remuneration will be paid for this period.
  • Grievance arrangements
  • Termination of Contract Notice
  • Redundancy
  • Disciplinary procedures
  • Signatures of both the employer and employee

Types of employment

  • Permanent/ongoing employment (full-time or part-time)
  • Temporary or fixed term employment (full-time or part-time) for a specified period
  • Casual employment (full-time or part-time)

Reasons for changing an employment contract

An employer sometimes needs to make changes to working practice because of economic circumstances. The business may need to be reorganised, moved to a new location, or there may need to be changes because of new laws or regulations. Things that might change include:

  • rates of pay
  • working time (for example, longer or shorter hours, different days)
  • duties and responsibilities
  • the duties and responsibilities of immediate boss
  • the location of  work

Employer might need to make a change to correct a mistake in drawing up the contract. In some circumstances, action like a demotion or a pay cut might be authorised as a disciplinary measure. Check the disciplinary procedure to be sure.