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Contract of Service

Updated: Jul 3



What to include in contract of service and key employment terms (KETs)


What is a contract of service

A contract of service defines the employer-employee relationship, including the terms and conditions of employment. The contract must include key employment terms (KETs) and essential clauses, such as hours of work and job scope.


A contract of service is an agreement between an employer and an employee in which:

  • One person agrees to employ another as an employee

  • The other person agrees to serve the employer as an employee

The agreement can be in writing, verbal, expressed or implied. It can be in the form of a letter of appointment or employment, or an apprenticeship agreement. However, to minimise disputes on the agreed terms and conditions, the contract should be in writing.


Key Employment Terms (KETs)


Requirements


If you are employed on a contract of service, you must be issued with the Key Employment Terms (KETs).


Employers must issue Key Employment Terms (KETs) in writing to all employees who meet all the following requirements:

  • Are covered by the Employment Act; and

  • Are employed for a continuous period of 14 days or more. This refers to the length of contract, not the number of days of work.

The length of an employee's service is calculated from the date on which the employee starts work, and not the date of confirmation.


To minimise disputes on the agreed terms and conditions, the contract should be in writing, e.g. a letter of appointment, and include details of the KETs.


When should written KETs be issued?


Within 14 days from the start of employment.


Example

If your employee starts work on 1 January, you must issue the KETs by 15 January.


What form can the written KETs take?


Can be issued in soft or hard copy, including handwritten.


Common key employment terms, e.g. leave policy, medical benefits, can be provided in an employee handbook and/or company intranet


Items that must be included in your KETs


Your employer should include the following items (listed below) in your KETs, unless it is not applicable to the employee.


Example

If the employee is a PME and overtime pay does not apply, the KETs don’t need to include items 11 (OT period) and 12 (OT pay).


Details of employment


1. Full name of employer


2. Full name of employee (as specified on the identity card, work pass or passport)


3. Job title, main duties and responsibilities


4. Start date of employment


5. Duration of employment (if employee is on a fixed-term contract)


Working hours and rest day


6. Working arrangements, such as:

• Daily working hours (e.g. 9.00am to 6.00pm, including 1 hour lunch break)

• Number of working days per week (e.g. 5)

• Rest day (e.g. Sunday)


Salary


7. Salary period (e.g. 1 Jan 2019 to 31 Jan 2019)


8. Basic salary


For hourly, daily or piece-rated employees, employers should also indicate the basic rate of pay (e.g. $X per hour, day or piece)


9. Fixed allowances


10. Fixed deductions


11. Overtime payment period (if different from item 7 salary period)


12. Overtime rate of pay

13. Other salary-related components, such as:


• Bonuses

• Incentives

Leave and medical benefits


14. Types of leave, such as:


• Annual leave

• Outpatient sick leave

• Hospitalisation leave

• Maternity leave

• Paternity leave

• Childcare leave


15. Other medical benefits, such as:


• Insurance

• Medical benefits

• Dental benefits


Others


16. Probation period


17. Notice period


18. (Optional) Place of work


• Indicate if the work location is different from the employer’s address. Although optional, employers are strongly encouraged to include this info.


Starting a contract of service

The contract is in effect when the new recruit turns up for work on the appointed starting date.


If the recruit fails to turn up:

  • The Employment Act does not apply, as the employer-employee relationship did not start

  • The employer cannot claim notice pay or any compensation in accordance to the Act

  • Any claims for compensation by the employer will have to be a civil claim through a lawyer

Confirmation of an employee

Confirmation depends on the terms in the contract, as it is not covered by the Employment Act.


Terminating a contract of service

Either the employer or the employee can terminate a contract of service.


For help complying with these requirements on your employment contracts, you can contact Bestar. We help you draft an employment contract that includes all the essential elements of a typical contract, or modify it to suit your specific needs and situations.

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