Having a signed contract between employer and employee indicates that they’ve reached the stage of their negotiations where they create an employment relationship on agreed terms and conditions. These terms range from the place of work to the compensation the employee will be paid for their services. In this blog, we give further insight into employee contracts.
What is a contract?
A contract is a legally binding document between two or more parties. It defines and determines the rights, duties, and responsibilities of all those involved. So, it becomes legally binding when all parties sign the agreement. Contracts are essential to managing relationships as it provides certainty as to what the parties involved expect from each other.
For a contract to be valid it must include:
1- Consensus: the parties’ intent in their minds must match all material aspects of their agreement.
2- Capacity: the parties must have the necessary legal capacity to agree to and abide by the contract.
3- Formalities: meaning, in cases wherein the agreement should be in a certain format, for example, in writing and signed, these formalities must be respected.
4- Legality: the agreement must be lawful, meaning, it cannot be prohibited by law or common law.
5- Possibility: the commitments must be performed, and can be performed when the agreement is entered.
6- Security: the agreement must have definitive and absolute content so that the commitments can be enforced.
Can an employer change a work contract
The general understanding is that terms and conditions of an employment contract may not be changed unilaterally by an employer. In a situation in which amendments need to be made to a contract, consent from the employee is essential. If the employer unilaterally changes the employee’s terms and conditions of employment, the employee has the right to declare a labour dispute at the CCMA.
In the event that an employee’s job description is substantially changed, is when a unilateral change to the contract of employment can be made. Often changes in terms and conditions are necessary for the survival of the organisation or to become more competitive or efficient. There has to be a justifiable operational/business rationale for making those changes.
Once the employer has consent of the employee, the terms and conditions of employment that are to be amended, must be mentioned in writing, as an addendum to the contract of employment.
What renders a contract null & void?
A contract may be deemed null and void after it’s signed, meaning it becomes legally invalid. Below are some of the most common reasons a contract may be deemed null & void:
– The subject of the contract is illegal: For example, if you sign a contract to launder money for an organised crime syndicate. If there is a breach in contract, there is no legal course of action as the subject matter is unlawful.
– The terms are vague or impossible to fulfil. Let’s say a contract was signed to supply a restaurant with a certain amount of fresh abalone, but this obligation can’t be fulfilled because a ban on harvesting abalone was subsequently passed. This explains that the contract may be considered null and void because the obligation became impossible to fulfil.
– Lack of consideration. There needs to be a clear objective for the contract, wherein all involved are in an exchange. In this case, one may not contractually agree to do something they’ve already done, this is called “past consideration”. Or something they’re already legally required to do.
– Fraud. A contract could be invalidated because one party got the other party to sign it by lying or concealing important facts.
It’s important to be aware of what is lawful and unlawful when it comes to employment contracts. Contact us at MFM Attorneys to assist with any contract needs or employee disputes.
