Benefits of Contract of Employment You Didn’t Know

There are benefits of having a contract of employment. Many people work for their employees without having a contract of employment. Some contracts of employments too are not favorable. I can not enter into a contract of employment where I will not gain any benefit. Similarly every employer will not enter into an employment contract where he will not gain. 

Seven Benefits Of Contract Of Employment To Employers 

In every contract, there exist an advantage to both parties, similarly on the contract of employment, the employer expect to get “value for money” while the employee expect to get “value for service”

  1. Achievement of business objectives 

The employer expects that the employee will deliver the agreed task for the achievement of the organizational objective. It is therefore an advantage to the employer when the objective of the business is achieved through the employee. 

  1. Able to attend to other tasks. 

Secondly, it gives the employer an opportunity to attend to other business of hers which she might have not been able to do. 

  1. New ideas into the business.

Every professional has a dosage of ideas about his/her profession. Signing  an employment contract with a professional allows the employee to come into the business with new great ideologies that will help boost performance.  

  1. Detailed terms of employment.

Signing an employment contract helps the employer to clearly explain the roles of the employee and what is expected from her clearly on paper.  

  1. Legalities. 

The employer has bases to go to court when the employee breaches the contract. The court will request proof of heaven gone into a contract of employment agreement  with the employee scrutinizing the terms and the proof of breaching the contract. 

  1. Standardization and good image

The employer sets a strong standard for making its employment processes formal, it presents a good image to the public and builds trust before clients. 

  1. Owns employee intellectual property. 

The employer takes ownership of every work done by the employee. 

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Six Benefits Of Contract Of Employment To Employees 

Same as employers gain huge advantages from signing an employment contract with their employees, employees also gain advantages for formalizing their employment contracts. 

  1. Secured employment

Firstly, employees get secured when their appointment is formalized. This serves as a huge relief and takes away the fear of losing their job without proper process. 

  1. Legalities. 

In addition, employees can easily send their case to court should the employer illegally terminate the appointment or breach any of the clauses stated in the contract of employment. 

  1. Spelt out terms.

Thirdly, employees get their roles and condition of service spelt out in their contract document. Details of the contract are mentioned in the employment document hence the employee can visit to refresh the memory to be conscious of her obligations.  

  1. Structured work.

Moreover, an employment formalized by signing a contract of employment spelt out  the responsibilities and expectations from both parties. To the employee it is good because everything is structured even how much to be paid.  

  1. Emotional stability . 

One of the key factors that determine productivity is workplace emotional stability. Many employees who do not have formal employment contracts suffer emotional stress because they end up working beyond what is required. These staff end up not working with good emotional stability. So one of the benefits to the employee is that a formalized contract of employment brings good emotional stability to staff. 

  1. Negotiate in good faith

Lastly, negotiation is mostly done in good faith for the employee to get the clear picture of what will come to him or her at the end of the contract. 

Disadvantages Of Contract Of Employment  

In as much as there are numerous advantages to the employer and the employee in contract of employment, there exist some disadvantages too;

  1.  Parties can sue easily when anyone breaches any clause of the contract  
  2. Amendment after implementation of the contract is not easy 
  3. Both parties can not evade tax . This applies to start up employers and first time workers especially in developing countries.
  4. Parties are bind to comply with any clause in the contract 
  5. Strictly performed according to the contract agreement, any addition so wish to be performed must be added to the document before. 
  6. Most often the contract is professionally inclined devoid of personal relationships.  

How Long Should Contract Of Employment Last  

But, the duration of an employment contract is dependent on the type of business the employer is engaged to. Meanwhile, according to the Labour Act (2003) Act 651, section 107 (1) every Collective Agreement between an employer and employee is subject to renewal at least every one (1) year. Out of experience some organizations have it as a maximum of two(2) or four (4) years depending on the business operation. Besides, a contract of employment can last within hours in  a day, a whole day or for the lifetime of the parties involved. 


I feel like not ending this article  because I am  enjoying the subject and hope you are too. To get a full understanding of this article you must read my earlier article on “understanding contract of employment”.  kindly leave your comment below or send me your feedback through WhatsApp, Facebook or my Instagram handles. In the nutshell, I wrote about Contract of employment in my previous article and now, how essential is a contract of employment and ended with the longevity of a contract of employment.  

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