L8 BIZ LAW

CONTRACT OF EMPLOYMENT

The legal basis of employment remains the contract of employment between the employer and the
employee. In most employment situations, both the employer and the employee (worker) have
rights and also obligations.

Nature of contract of employment

The contract of employment is the focus of attention of labour law. At common law, it is assumed
that the terms of the contract are freely established by parties who are equal.

This is the concept of the so-called freedom of contract, which is said to exist between the
employer and the employee. However, this is not always the situation and is not always so.

Except for the rare employees who can match the bargaining power of the employer, for the
majority of employees, the major terms of the contract are fixed by the employer and are offered
to the employee on the basis of “take it or leave it.”

For such employees, the employment relationship implies a relation of undefined authority on the
side of the employer, and undefined subordination on the side of the workman.

Formation of contract of employment

The capacity to enter into contract of employment applies generally in all contracts.
However, the Labour Act provided that infants and young persons may be engaged on daily basis
for wages but not
- at night or
- on public holidays, or
- in underground operations, or
- on machines or
- shipping vessels, or
- against the wishes of their parents or guardians communicated to the employer.
Although women have capacity to enter into employment contract, they have some protection
under the Labour Act by which the following are implied in their favour:

(a) They are entitled to maternity leave of six weeks before and six weeks after delivery;
(b) They shall not be given notice of dismissal during their absence on maternity leave, even if
they remain longer than necessary due to illness;
(c) They shall not be employed on night duty nor shall they be employed on underground work in
a mine, except they are holding positions of management and do not perform manual labour and
women employed in health and welfare services

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Rights of the employer and worker
Rights of the employer
• The right to employ a worker

• The right to discipline the worker

• The right to transfer the worker

• The right to promote the worker

• The right to terminate the employment of the worker.

• He also determines the type of products to make or sell.

He determines the prices of his goods and services.

Rights of the worker

• Right to work under satisfactory, safe and healthy conditions;

• Right not to be discriminated against at the workplace;

• Right to the receipt of equal pay for equal work without distinction of any kind;

• Right to rest, leisure and reasonable limitation of working hours and period of holidays;

• Right to form or join a trade union of his choice; and

• Right to be trained and retrained for the development of his or her skills and receive information
relevant to his or her work.

Duties of the employer and worker

Duties of the employer

(a) Duty to provide work for his employee, especially the opportunity for work is contained in the
contract of service;
(b) Duty to pay wages and remuneration regularly weekly, forth-nightly, or monthly, but not
longer than monthly;

(c) Duty to provide a written statement of the terms of employment within three months after the
employee has assumed duty;
(d) The duty to provide a safe system of work, which include:
- proper appliances and plants,
- supportive competent staff;
- proper work system and effective supervision,

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- payment of expenses reasonably incurred by the employee in the course of his duties
- payment of compensation to injured employee or the relatives of deceased employees who have
suffered mishap in the course of duty,
- grant agreed leaves and one work-free day per week, and
- pay redundancy allowance to workers that are laid off.

Duties of the employee

(a) Duty to exercise his professed skill and diligence.
(b) To perform the duty for which he is employed and other related duties;
(c) Duty to obey lawful and reasonable orders of his employer where those orders are with the
terms of the contract and are not illegal nor contrary to public policy;
(d) Duty to render his services personally and not delegate his duties without the consent of the
employer;
(e) Duty to keep secret his employer’s confidential information and trade secret;
(f) Duty to serve his employer faithfully and not put himself in a situation where his interest will
conflict with that of his employer.

Termination of contract of employment

Contract of employment may be terminated for the following reasons:
(a) Natural events such as death and frustration as well as operation of law;
(b) Compulsory winding up of the employer’s company;
(c) Dissolution of partnership in a case of personal service;
(d) Compulsory conscription of the employee during hostility or war;
(e) Prolonged illness of the employee;
(f) Mutual agreement as when ad-hoc job is completed and on happening of some event, or
contingency, or by effluxion of agreed time;
(g) Termination of the employment by the employer or employee after due notice.

Remedies
- Damages are the normal remedy available for breach of a contract of employment. This is
usually monetary compensation to the injured party.
- Reinstatement may be another option. It means appointing the employee back to the
position he occupied before and therefore the enjoyment of all the benefits that go with the
position.
- Re-employment of the worker either in the work for which he was employed before the
termination or in other reasonably suitable work on the same terms and conditions enjoyed
by the worker before the termination is the other alternative.

Redundancy
- Redundancy refers to termination of employment of some workers when an employer
contemplates that there is a need for the introduction of major changes in production
programme, organisation, structure or technology of an undertaking.
- The employer will be expected to provide in writing to the Chief Labour Officer and the
trade union concerned, not later than three months before the contemplated changes all
relevant information including the reasons for the termination, the number and categories

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 of workers likely to be affected and the period within which any termination is to be carried
out.
- The employer is also expected to consult the trade union concerned on measures to be
taken to avert or minimize the termination as well as measures to mitigate the adverse
effects of any termination on the workers concerned such as finding alternative
employment.
- Redundancy implies the severance of the legal relationship of worker and employer due to
the close down, arrangement or amalgamation and the worker becoming unemployed or
suffering a diminution in the terms and conditions of employment.
- This situation called for the payment of redundancy pay.
- Payment made to the worker by the undertaking at which he was immediately employed
before the close down, arrangement or amalgamation as a form of compensation is what is
known as redundancy pay.
- The amount of redundancy pay and the terms and conditions of payment are subject to
negotiations between the employer and the worker or their representatives.