Do you know the difference between the different types of job contracts? Perhaps you’ve been offered a fixed term contract? Or you’re employed on a part-time basis? How different is it from having a full-time job? Baba has been working on a contract basis for a long time. He’s excited about being offered a full-time job! We’ll find out why.
But first, let’s find out more about contracts of employment.
What is a contract of employment?
• A written or verbal agreement between an employer (a person or organisation that hires someone) and employee (the person who gets the job). Importantly, verbal agreements are very hard to prove so it’s always safer to have contracts in writing.
• It states exactly what the benefits will be for the employee.
• It states what rules the employee needs to follow (such as hours of work).
• It ensures both employer and employee agree to the terms of work before the employee starts the job.
• If a dispute arises, it means there shouldn’t be any uncertainty about what the employer and employee agreed on.
• All contracts are subject to the Basic Conditions of Employment Act and the Labour Act. (See these two sites for more information: Labour Guide and MyWage)
The different types of employment contracts are:
This means that you work for an employer with no fixed end date. It ends when you either resign or you are dismissed by the employer.
This means that you work for an employer for a fixed period of time only. After that date your contract comes to end unless it is renewed. If you work on a contract basis you are covered by the laws of contract which are different from South Africa’s labour laws. This means that you don’t get the benefits and protections of the labour laws.
This means that you are permanently employed, but work fewer days a week or fewer hours a day than permanent employees. You still get benefits but they are based on the number of hours you work.
This means that you work for a short period such as one day, or a few months, for an employer, or until a task is completed. Your work has a specific start date and end date. Some temporary workers are hired by ‘labour brokers’ to be placed at another organisation. The law was changed in 2014 so that temporary work cannot last for more than three months. After that, it should become a permanent job unless there are special reasons for it to continue. Temporary workers also have to be provided with normal benefits such as sick and annual leave.
A full-time job contract needs to be in writing. What can Baba expect to see included in his full-time job contract, should he get the job?
• His employer’s details.
• A job description of the work he is expected to do.
• His salary and how it will be paid.
• Deductions from his salary (such as UIF – see details below).
• His working hours.
• How much annual, sick and other types of leave he is entitled to.
• The amount of time he needs to give as notice to the organisation if he resigns.
• Benefits that may apply to the position (such as a bonus).
Having full-time employment gives you job security, which is a real benefit. Once you have gone through your probation period of 3-6 months, you can start to work out your financial plan for the future. You know how much you will earn and this gives you security to set your saving, investing and other financial goals. As long as you work well, there is no reason why you should not continue in this job until you decide that it is time for you to move on. The employer often wants you to be loyal to the organisation and so may also treat you better than with other types of employment.
Unemployment Insurance Fund (UIF)
All employers have to register and insure their employees with UIF. This includes full-time and part-time employees, except for those who work fewer than 24 hours a month, foreign nationals, learnerships and workers who earn commission. Both the employer and the employee pay 1% of the employee’s monthly pay to the UIF. This gives you an insurance fund to claim from for six months, should you find yourself without work in the future.
Workers’ Compensation Benefits
Workers who are affected by injuries and diseases that are caused as a result of job-related duties can claim for workers’ compensation benefits. Should Baba fall off his ladder while doing his maintenance work he will be able to apply for this insurance (unless it only affects him for three days or less). This covers 75% of Baba’s salary for three months, should he need to be off work that long.
You are entitled to 15 days of annual leave a year, based on a 5-day working week. You are also allowed three weeks of sick leave in a 3-year period. Try not to take sick leave unless you are sick. You never know when you might actually need it. You may take three days of compassionate leave every year if you can’t be at work because of a family crisis. Public holidays are also leave days and are not included in the number of leave days you are allowed to take in your contract.
Some organisations offer a bonus scheme to their employees. This may take the form of a 13th cheque or an incentive scheme.
Certain organisations offer a medical aid contribution to their employees. This means that that you and your organisation both pay towards your medical aid/insurance costs.
It may be that your organisation pays towards a pension scheme for its employees. It is similar to medical aid contributions as both you and the employer pay towards this.
Baba will certainly benefit from having a full-time job. Unlike his contract work, he will have a lot more job security. This will help him be able to organise his financial life better so that he won’t find himself in debt in the future. He needs to be well prepared for his interview. But he also needs to know what to expect from his job contract and to ask for clarity if he is not sure about anything.