Employment Contracts – 5 Terms not to skip over

The Basic Conditions of Employment Act Section 29 provides us with certain particulars that must be provided to a new hire in writing. Those particulars are not going to be covered in this article, but my focus will rather be on the nice to have terms or clauses that are in my opinion equally important.

If you would like to read more on those particulars feel free to scoot over to my other article called “Employment Contracts for employers in South Africa – Essential Tips”. There you will find the info needed as well as some other great tips.

The first term I want to share is the term of Confidentiality.

Employment contracts will often include a clause requiring the employee to protect and keep secret the employer’s confidential information. A confidentiality clause, while not necessary in all circumstances or types of employment, will be important in situations where the employee deals with or has access to the employer’s confidential information.

Employers should ensure that the information falling within the definition of “Confidential Information” as drafted is broad enough to capture all the employer’s confidential information. Employers should also ensure that the obligation imposed on their employees is not limited to keeping secret the employer’s confidential information, but also includes a requirement to safeguard and take all reasonable steps to always protect the employer’s confidential information.

However, the confidential information clause should not be drafted in such a burdensome manner as to prevent the employee from effectively carrying out their duties and responsibilities in their given position or sharing confidential information with colleagues on a need-to-know basis.

The second term I found to be an important one is the term Restraint of Trade.

A restraint of trade clause is normally included in an employment contract to enable an employer to protect their business from competition from ex-employees. In terms of a restraint of trade agreement, an employee is prevented from starting their own business in competition with their employer or working for competitors for a specified period in a specified geographical area after ending their employment contract.

The restraint of trade is not enforceable if it is disagreeing with public policy on account of it unreasonably restricting a person’s right to trade or practice a profession. In order to determine the fairness of a restraint of trade agreement all the circumstances of the case must be taken into consideration.

Another important term is the term Conflict of Interest

A conflict-of-interest clause in an employment contract provides guidance for employees that applies both during their working hours and their off-hours. A conflict-of-interest clause boils down to the following rules:

• Employees will not perform work for other employers, or work on their own self-employment undertaking, during business hours.

• Employees will not take a second job with a business that is in competition with the employer, or that has a partnership or affiliation with the employer.

• Employees will inform the employer if a situation develops where the employee’s personal interests could conflict with the best interests of the employer.

Including a conflict-of-interest clause provides employers with a level of assurance that new hires will avoid putting themselves in a situation where their personal life is at odds with their job.

Job poaching is another term that can protect your business

When an employee leaves a job to go to a new employer, they will sometimes try to convince other employees to follow them to the new company. The same activity can occur if an employee quits their job in order to start their own business.

This is known as job poaching, and it is a serious problem for employers. A business owner can suddenly find themselves losing several trained workers from a single department in a short period of time.

A job poaching clause in a contract of employment says that an employee who leaves their job is forbidden from soliciting any of their former co-workers into following them to a new company.

Obviously, a job poaching clause doesn’t prevent a former employee from approaching your existing staff members. But it can provide some legal recourse if the activity is detected and verified.

Lastly but not least is the Protection of Personal Information (POPI) Act.

The purpose of POPIA is to regulate and formalise how companies collect, store, protect, access and distribute consumer information and to protect the ongoing integrity and sensitivity of that private information.

The Act offers many precautions regarding the use of an individuals’ personal data, and primarily protects individuals from unwanted emails & SMSs for services that they never applied for, as well as against any security breaches that could result in identity theft, when personal information is stolen or offered too freely by a third party.

Amongst those covered are employees’ information pertaining to HR info, Payroll records, CV’s, applications for employment, CCTV records, Time & Attendance records, performance reviews, IR records, emails, etc.

It is hugely beneficial to have a clause for this in place explaining why specific personal information is required and does the Employee consent to this? In what manner is the information obtained, and how is this information then stored? Is the information stored in a secure environment?

For information on how to implement POPIA in your workplace, go and check out my article “POPIA tips in the Workplace: A quick Guide for Employers”.

Employment contracts are an integral part of doing business, and the contract you use with each new hire is one of the most important. By including the right statements and clauses in your employee agreement, you can improve the security of your business, and better manage the expectations of new hires.

If you need assistance from an HR Specialist in building your employment contract then don’t hesitate to contact us at FIC Consulting.

If there is something I want you to know about me right away, it’s that I have a passion for supporting business owners. I believe in the future of South Africa and that there are so many opportunities out there to be successful and to make a change to our economy.

I want to be part of that change by providing businesses with core HR and Labour Solutions that will not only result in legislative compliance but actually positively impact their bottom line.

Over the years I have gained practical HR experience working in various sectors such as mining, construction, financial services, and corporate legal. As a business owner myself, I can relate well to businesses and what their needs are.