Do You Understand Your Contract of Employment?

Some of the confusing terminologies in Human Resource practice to employees are contract of employment, contract of service, and contract for service. I will talk about the contract of employment in detail for a clearer understanding. 

Every Contract is Legally Inclined 

In the first place, a contract is legally inclined in every place it appears. It is mostly between parties, two individuals being it families, friends or foreigners. Legally, every contract of employment when offered and accepted has its legal endorsement and compliance to every clause in the offered document. 

What is Contract of Employment?  

A contract of employment is an agreement between an employee and an employer. In this instance, the employee, which is (me) to be employed and paid by an employer which is (you). The employer is the company who stands as a personality and engages people to perform business activities on behalf of the company. It is therefore demanding on both parties to perform legal obligations for the achievement of the company objectives. A contract stands as an agreement between two individuals who want to go into a subject that needs concern of the parties to perform their obligation in the said subject. A contract can be an agreement of an employment-related activity, commitment into a task or into an association, a pledge to deliver as expected. 

Here, the employer gives an offer to the employee on what is expected of the employee to do which is subject to acceptance or decline. The employee goes through the offer document and brainstorms to decide as to whether she will accept the offer or not.

What makes a Good Employment Contract?

So, even though a contract of employment can be both written and verbal, it is advisable that any contract that especially has a long duration, beyond six (6) months, must be in formal terms, spelling out the dos and don’ts in the contract offer.   

Intellectual property in contract of employment

 Now, in every contract of employment, the employer engages the employee in totality, the employees’ intellectual property is owned by the employer while the contract is still in force.  This means that anything the employee does while in the company using the knowledge gained out of training, experience, or academic studies are done in the interest of the employer. The employee cannot own it and sell it without the knowledge of the employer. The employee again cannot use the paid hours of engagement by the employee to perform any other assignment to a different employer in the deterrent of the employer. 

Negotiate in good faith 

Besides, negotiation for the contract must be done in good faith, where nothing is hidden from any of the parties (Employer and Employee). Negotiating in good faith means both parties must bring out what consolidates and constitutes remuneration, forms the contract, and what is really expected by each party to make the execution of the contract a success.  

Working tools 

Under every contract of employment, the tools for job performance are provided by the employer. I as an employee am not supposed to use my own laptop or personal car for official purposes. Who pays the maintenance and fuel cost. Unless it is agreed under the employment terms (condition of service) that my employer is to bear the cost or pay monthly allowances for using my own working tools.  

Contents of  A Good Contract of Employment

Probationary period 

It is important to note that a contract of employment must have a probationary period (moment of trial) before an agreed duration of full contract duration terms. The Ghanaian labour law is silent on the duration of a probationary period for employment contacts. This means that the probationary period stated in companies’ conditions of service, HR Manual, or Collective Agreement is what will work. It, therefore, varies from company to company. Many organizations have chosen to do their probationary period six (6) months, others three (3) months, and few are one (1) year probationary period terms.  

The Role of the Employer 

Therefore, In a contract of employment, per section 9 of the Labour Act, Act 651 (2003), the employer has some key roles to play as follows;

  •  Provide work and appropriate raw materials, machinery, equipment, and tools as said earlier. 
  •  Pay the agreed remuneration at the time and place agreed on in the contract of employment or Collective Bargaining Agreement or by law or agreed between the employer and the worker;
  • Take all practicable steps to ensure that the worker is free from the risk of personal injury or damage to his or her health during and in the course of the worker’s employment or while lawfully on the employer’s premises;
  •  Develop the human resources by way of training and retaining of the workers;
  •  Provide and ensure the operation of an adequate procedure for the discipline of the workers;
  •  Furnish the worker with a copy of the worker’s contract of employment;
  •  Keep open the channels of communication with the workers; and
  •  Protect the interests of the workers.

In light of the above, the employer is expected to pay all benefits due to the employee per the agreement without default. Mandatory Employee Social Security, (1st and 2nd Tier). Provide all gadgets that will aid in the performance of the task. Medical benefits, overtime allowance for every extra hour of work, and due bonuses. In this context, the employee goes to the employer with only his intellectual ability and personality.  

The Employee Role 

Now on the employee, the central pivot of a contract of employment is the employee performing her obligation while the employer takes care of the employee as per the agreed terms.

Similarly, in spite of the agreement had between the parties, section 11 of the Labour Act 2003, Act 651 require an employee under every contract of employment to;

  •  Work conscientiously in the lawfully chosen occupation;
  •  Report for work regularly and punctually;
  •  Enhance productivity;
  •  Exercise due care in the execution of assigned work;
  •  Obey lawful instructions regarding the organization and execution of his or her work;
  •  Take all reasonable care for the safety and health of fellow workers;
  •  Protect the interests of the employer; and
  • Take proper care of the property of the employer entrusted to the worker or under the immediate control of the worker.

 What should be in every contract of employment? 

The following must be seen in every contract of employment

  1.     The name of the employer
  2.     The name of the employee
  3.     Date of commencement of the contract
  4.      Duration of the contract
  5.     The office location of the employer 
  6.     Where you will be working from
  7.     The position to occupy 
  8.      Hours of work
  9.      Leave period and Rest hours
  10.    Remuneration for the period must not be below the minimum wage of the state.
  11.   Social security (13% employer contribution and 5.5% employee contribution).
  12.       Medicals   
  13.     Allowance.
  14.       Exit clause (Termination of contract by both parties).
  15.     Renewable clause where necessary

Exit clause of contract of employment 

Furthermore, most often, employees do not concentrate on the exit clause of a contract but the remuneration. It is equally important to look at the exit clause in every contract that is related to employment. As stated by the Labour Act 2003, Act 651, section 15 and 62, and C158 of the ILO. Notice is to be given by either party should he or she decide to exit from the contract or end the contract.   


Contact me on all legal HR issues for a Free Consultation through or 0248583562. To actually get the conclusion of this article, get my next article titled “Benefits of a contract of employment you didn’t know”.  All these are to let you understand your employment contract.

Scroll to top