Writing Employment Contracts (Employers)

How to create fair employment contracts that comply with statutory requirements.

What Is a Fair Employment Contract

A fair employment contract is clear and well-written, and provides you and your employee a common understanding of each other's rights and obligations.

Why It Is Important

Clear employment terms protect both you and the employee, and prevent potential miscommunication and disputes.

What You Must Do to Be Fair and Compliant

If your employees are covered by the Employment Act (EA) , you must issue itemised pay slips and include key employment terms in their contract.

Please refer to Changes to the Employment Act with effect from 1 April 2019 for an implementation guide for employers and HR practitioners.

To avoid common employment disputes, employers are reminded to:

  • Include detailed salary terms (e.g. date of salary payment, salary components, frequency of payment and when the salary should be paid upon termination).
  • Make salary payments at least once a month, and within a week after the end of the salary period.
  • Make the final salary payment within three days of the last day of employment.
  • Stipulate the same duration of notice period for both employer and employee.
  • Provide both parties the option to terminate the contract with due notice, or payment in lieu of notice.
  • Conduct a formal inquiry before making any decision to dismiss an employee due to misconduct. 

Tripartite Guidelines

Refer to the Tripartite Guidelines on Fair Employment Practices to ensure that you abide by the guidelines on all the relevant practices.

How to Be Progressive

Apart from having well-written contracts, it is important to have a set of fair and consistent policies which are well implemented by the employer and communicated to the successful job applicant. Employers are encouraged to explain the terms of employment clearly to the employees, giving them an opportunity to clarify any doubts.

Have a Comprehensive Annual Leave Policy

In addition to having clear guidelines on application and utilisation of leave, you are encouraged to:

  • Allow employees to carry forward any unused leave for at least a year.
  • Allow compensation in cash for unused leave at the end of the employee's employment.

Recognise Work Done on Public Holidays

Where employees are not covered by the Employment Act, you are encouraged to be flexible and acknowledge employees' efforts when they put in additional work hours on public holidays.

Be Clear on Medical Leave and Benefits

You should have a comprehensive policy on medical benefits and sick leave. Provide information on the application and utilisation of sick leave in your contract. You are also encouraged to recognise medical certificates from all registered medical practitioners.

Be Clear on Terms and Conditions for Bonuses, Annual Wage Supplement and Commissions

State employee entitlements and eligibility conditions clearly in the employment contract (or in an accompanying policy document such as the employee handbook, company circular or policy document). This includes whether an employee is eligible for bonuses and annual wage supplements when the employment contract is terminated, especially during the probation period.

For commission-earning employees, ensure that the related entitlements, conditions and clauses are clearly stated and thoroughly explained.

Reimburse Expenses

Indicate the types of reimbursements that the employee is entitled to. If these details are indicated in the employee handbook, do go over the details before he or she joins your organisation.

Provide Fair Termination Terms

You should provide sufficient training and coaching to help your employees perform their role in the organisation before terminating their employment.

You can improve your employees' skills and confidence through the following measures:

  • Performance improvement plans
  • Training and development programmes
  • Coaching
  • Counselling
  • Redeployment for better skill-matching

Implementing a Fair Training Agreement

As an employer, you have an implicit duty to upskill your employees through training and development programmes to enable them to contribute to your organisation effectively and create value for the business. 

If you have made a strategic investment in your employees’ development through programmes such as certificated courses or professional development that enables them to obtain higher qualifications, it is fair for you to expect them to continue contributing to the organisation over a reasonable period upon completion, failing which they should bear part of the programme costs. 

Before sending your employees for such programmes, you should discuss with them the terms and conditions in the form of a Training Agreement, and this will include:

  1. Total costs of the programme which the company will incur.

  2. Duration of bond upon completion of the programme.

  3. Recovery of costs from the employees when the bond is not fulfilled and how this is computed. (We recommend that liquidated damages be computed on a reducing scale, or pro-rated based on the remaining duration of the employees’ bond)

  4. Other terms and conditions.  

This Training Agreement should be separated from the employment contract so that any changes to either document will not impact the other. When drafting the Training Agreement, you should:

  1. Require both employer and employees to sign the Training Agreement before the commencement of the programme.

  2. List the detailed breakdown of the total investment costs, for example:

    • Certificated courses or professional development programme fees.
    • Airfare costs and living expenses (applicable for programmes conducted overseas).
    • Miscellaneous allowances etc.

  3. Specify the bond and how the costs or liquidated damages will be computed if the bond period is not fulfilled.

Both employer and employee must understand and accept their responsibilities in this Training Agreement.   

We encourage you to go beyond the practices presented here. You can browse our 
resource collection to get tips, tools and ideas and learn from case studies and interviews with progressive employers.