It
is not mandatory to have a written employment contract and Civil Code of the
Philippines recognizes the freedom of the parties to stipulate or establish the
terms and conditions of a contract, provided these are not contrary to law,
morals, good customs and public policy.
Notes:
Labor law and standard provisions are deemed to be written into all employment
contracts even though they are not explicitly included in the contract. Any
terms or conditions that violate the applicable labor standards are null and
void.
Employment
contract may include the followings:
1. Job
Title and Expected Job Functions
Your employment contract should also include your job title
as well as a breakdown of the responsibilities expected of you. It is important
that you review these responsibilities to ensure your skills, talents, and work
experience are in-line with the position and if it’s the same as what was
discussed with you during the interview.
The contract should also clearly stipulate what you should
receive for your work, whether it’s an hourly wage, a monthly salary, or
commission-based remuneration. Additional monetary (or non-monetary) incentives
that have been discussed during the interview such as sales bonus, health benefits,
and vehicle or travel expense reimbursements should also be in the contract.
Should you receive any type of bonus, its terms and conditions must also be
outlined clearly within the document.
2. Job
Scope and Limitation, Exclusivity, and Termination of Service
The employment contract should include information on
whether you will be working part-time or full-time and if you’re starting out
as a probationary or a contractual employee. If the contract includes an
exclusivity clause (whether you’re allowed to take on additional work on the
side or not), this should be explained in details clearly. More importantly, in
many countries employment contract should not prevent you from pursuing your
interests on your free time as long as it does not conflict with the things you
will be doing for the company.
3. Compensation,
Benefits
You should make it clear on working days, daily or monthly
rate since it’s the basis in calculating salary.
4. Termination
of Service
Just
Cause – The employment contract should also include details on how your service
can be terminated. Termination due to “just cause” means that you have failed
to deliver your end of the bargain or when you’ve broken specific and relevant
contract rules (theft, inappropriate behavior or joining company-prohibited
activities).
Without
Cause – Your employment contract may end, but not necessarily because of your
own action. This normally happens when the company is downsizing.
Resignation
– The employment contract ends because you have decided to leave the company.
Make sure you read about how long you’re expected to stay with the company
after your resignation so you can turnover your workload or train your
replacement; most companies would require at least a month for this turnover.
5. Special
Clauses (Non-Compete and Non-Solicitation)
In the event that your contract with the company ends for
whatever reason, these are special clauses you should be aware of:
Non-compete
Clause
A non-compete clause prevents you from joining any industry similar
to your previous company for a period of time, normally around 2-3 years. BPO, Retail and Sales Industry often include
non-compete clause(s) to an employment contract to protect their business and
it would be a good idea to check if the same is included in the contract you’re
about to sign. In
general, for a non-compete clause to be valid, it must be limited as to time,
place and trade. The determination of reasonableness is made on the particular
facts and circumstances of each case, and the Supreme Court has not set a fixed
time limit on the duration of a valid non-compete restriction.
Non-Solicitation
Clause
Most companies that require you to manage accounts of
important clients may include non-solicitation clause within your employment
contract. This means that when you leave the company, you are legally obliged
not to talk to your former company’s clients/customers or even employees. While
it is easier to enforce a non-solicitation clause over a non-compete clause,
you are better off understanding the implications of both special clauses so
you don’t get into any legal trouble. Understanding what’s on your employment
contract will help you make an informed decision and allow you to carefully
weigh your options.
Prohibition
against labor-only contracting
Labor-only contracting or the practice where the agency
"merely recruits or supplies workers to perform a job or work" for an
employer is the form of contracting that is prohibited. In labor-only
contracting, the agency "does not have substantial capital or investment
which relates to the job, work or service to be performed."
Notes: You can use agency-hired employees but
you CAN’T require them to perform jobs that are being done by regular employees
of the company. It’s the form of prohibited labor-only contracting.
Prohibition against ENDO (End of Contract)
Labor code also prohibits the continuous hiring of a
worker under a repeated contract of short duration. Even some big companies do
this not to regularize employees but it’s illegal.
Notes:
Basically, you have to expect that an employee is considered as a regular
employee after 6 months’ service with or without regularization notice/contract.