Contract of employment

Legal formalities when offering employment:

Dr. K. Kuhathasan-CEO: CENLEAD

Permanent employment is one, which automatically renews every month, unless and until either party terminates it. A monthly contract of employment therefore, gives an employee the right to remain in employment until he/she reaches the retirement age unless the employer terminates it prior to that. It is, therefore, often referred to by employers and workmen as 'permanent employment' and may be regarded as the normal type of contract for employment which is regular.

Under the Shop and Office Act, an employer is required to furnish to an employee the basic terms of employment in writing in the language with which the employee is fully conversant, on the date of appointment. This document that is commonly referred as the "Letter of appointment" should be made in duplicate, and the duplicate of the letter of appointment should be signed in acknowledgement by the employees.

If the letter is in English, a translation should be provided.

If any right conferred on any employee by the Act is affected or modified to the detriment of the employee or, any liability imposed on an employer by the Act is in any way removed to reduced by such agreement or contract, between the employer and employee, such terms or conditions shall be null and void and be replaced by the corresponding provisions of the Act.

Express and implied terms of employment

The terms and conditions of employment that an employer must furnish in writing to an employee are as follows:

* The name of employee and designation and nature of the appointment.

* The date on which the appointment takes effect.

* The grade to which the person is appointed.

* Basic remuneration and the scale of remuneration.

* Whether remuneration is paid weekly, fortnightly or monthly.

* Cost-of-Living allowance, if any, and other allowances, if any.

* The period of probation or trial, if any, and the conditions governing such period of probation or trail.

* Circumstances under which the appointment may be terminated during such probation or trial.

* Conditions governing the employment.

* Circumstances and conditions under which the employment may be terminated.

. Normal hours of work.

. Number of weekly holidays, annual holidays, casual and privilege leave, which such person is entitled to.

. Overtime rate payable.

. Provision of medical aid, if any, by the employer.

. The provision of and the conditions governing and provident fund, pension scheme or gratuity scheme applicable to the employment.

. Prospects of promotion

Are written contracts necessary

It is only under the Shop and Office Act, a letter of appointment is necessary. For appointments under other Acts such as Wages Boards Ordinance, Factories Ordinance etc., a letter of appointment is not necessary.

There is no general requirement of law that a contract of employment must be reduced to writing. However, a written contract of employment enjoys the advantage of easier ascertainment of the terms and conditions of employment.

Managers who give appointments under other Acts are advised to give a letter of appointment, when recruiting new hands.

Under the Shop and Office Act

Every employer shall maintain in respect of each employee -

* A service record

* A remuneration record containing the following particulars.

. Name of employee.

. Age:

. Sex:

. Class or grade, if any:

. Category or designation or occupation:

. Remuneration period (month, fortnight or week);

* Number of hours work performed during the remuneration period;

. Number of hours of overtime work performed during the remuneration period;

. Rate of remuneration payable;

. Allowances payable (each allowance to be shown separately).

. Gross remuneration earned for the remuneration period.

. All advances made out of the remuneration during the remuneration period.

. Contributions made by the employer and employee respectively in respect of the remuneration period, to any pension or provident fund;

. The amount of balance remuneration paid and the date of payment;

. The total amount of overtime remuneration paid in respect of each remuneration period;

. The amount recovered under the Income Tax Ordinance or under any other written law or order of court;

. Acknowledgement of the employee in proof of receipt of net remuneration.

Payment of remuneration

Deductions from the remuneration of an employee may be made by the employer.

* Any contribution which the employee desires to make to any pension fund, provident fund, insurance scheme, savings scheme or recreation club, approved in writing by the Commissioner.

* The price of any food or any article of food or any charges for lodging supplied or provided to the employee by his employer;

* The rent of any house provided for the employee by the employer;

* An amount required to be furnished as security by the employee, the amount of such deduction being not in excess of such percentage of the remuneration as may be approved by the Commissioner;

* An amount approved in writing by the Commissioner as a charge for any amenities or services provided for the employee by the employer.

* The price of any goods, sold to the employee out of goods kept for sale by the employer at the place of employment or at any other place;

* Any fine imposed on the employee by the employer.

Several small and medium shops and organizations do not maintain the above particulars. As a result such organizations are faced with several problems with Labour Officers of the Department of Labour.