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Knowing Your Contract

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Do you know what is in your employment contract? Read before you sign.

It is an exciting time, especially when you receive a job offer and a new employment contract. But what do all these terms, conditions in your contract mean and what should you be looking out for?

It is important to read the employment contract carefully, fully understand what the terms mean and know what to look out for. If you are employed as a Manager or Executive with a monthly basic salary of more than $4,500, you are not covered under the Employment Act1, and should pay more attention to the contract terms.

When you understand what to look out for, you understand both your rights and obligations as well as your employer’s, minimising employment disputes in future.

The employment terms which are generally more commonly brought up include annual leave, medical benefits, public holidays, salary payments, and termination of employment. However, there are other terms to look out for, and you should review the employment contract in totality.

Consider these points when you read through your contract:

Use this simple checklist to ensure you are aware of all your commitments and entitlements when you sign your new contract of service. As companies’ practices may vary, this checklist is not exhaustive, but we hope that it will provide you with the right perspective when you assess the offer.

Annual leave

  • Is the annual leave entitlement included?
  • Are you allowed to carry forward your annual leave?
  • Are you allowed to encash unconsumed leave upon resignation or termination?

Medical benefits

  • Are the medical benefits stated?
  • Are the sick leave and hospitalisation entitlements included?
  • Does the company have a comprehensive sick leave policy?

Public holidays

  • 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?

Salary payment

  • Does the contract state the basic salary as agreed?
  • Are the components of the salary clearly stated?
  • Are there any fixed allowances which were agreed upon, and are these included?
  • Are the payment conditions, if any, clearly spelt out?
  • Are you entitled to bonuses and other incentives?
  • Is the date of salary payment stated?
  • What is the frequency of salary payment?

Termination of employment

  • What are the clauses that would constitute a termination of employment?
  • What is the notice period for termination of contract, before and after the confirmation of employment?
  • Is the notice period the same for both parties?
  • Does it include the option to terminate the contract by serving notice or make payment-in-lieu of notice?
  • Do you look out for any penalties? (e.g. early termination of contract, failing to meet performance targets or misconduct)

 

Other areas:

Types of contracts

  • Is it a permanent position of a contract where you will be employed for a fixed duration (i.e. term contract)?
  • Does your contract state when your employment should start?
  • If it is a term contract, does it state when your contract should start and the duration of the contract? Will your contract be renewed and are there conditions for renewal?
  • Does your contract state that your employment is subject to other terms and conditions? e.g. Those found in your employer’s staff handbook. Do ask for a copy of the staff handbook when you begin employment.

About the Job

  • Does it state the title of your position?
  • Have you been given a job description?
  • Are there aspects of the job, work conditions or performance targets that you need to pay attention to?

Working Arrangements

  • What are your working arrangements?
  • What are your daily working hours?
  • Will you be required to work on shifts? If so, what is the shift roster, and does it provide sufficient rest days?
  • What are the number of working days per week, and rest days? If you are covered by the Employment Act, do refer to Part IV of the Employment Act2  which states the minimum requirements for rest days, hours of work, annual leave and other conditions of service.

Probation Period

  • Is there a probation period?
  • Which terms and conditions are different during the probation period?

Others

  • Are your entitlements to bonuses and annual wage supplements clearly indicated?
  • Is the commission structure clearly explained to you (if applicable)?
  • Are the entitlements to reimbursements of expenses incurred for work purposes stated?
  • Are you entitled to Maternity / Paternity / Childcare leave, and are the terms stated?
  • What other benefits does the company offer?

 

Find out more

As an employee, you can play your part. Do read your employment contract carefully before committing and signing it.

Employees can approach the Tripartite Alliance for Dispute Management in the event of employment disputes. It is located at Devan Nair Institute for Employment and Employability, and the Ministry of Manpower Services Centre. Alternatively, you may refer to the FAQs for more information.

 

1  Part IV of the Employment Act, which provides for rest days, hours of work, annual leave and other conditions of service, and only applies to a workman (doing manual labour) earning a basic monthly salary of not more than $4,500; or an employee who is not a workman, but is covered by the Employment Act and earns a monthly basic salary of not more than $2,500.

2  Do note that for rest days, hours of work, annual leave and other conditions of service, in the Employment Act, it only applies to two groups: (a) workmen (doing manual labour) earning a basic monthly salary of not more than $4,500 and (b) non-workmen who earn a monthly basic salary of not more than $2,500. If you are an executive or manager, you are not covered by the Act and must pay more attention to these terms in your employment contract.