The employment contract should be made in writing
An employment contract can be concluded orally, in writing or electronically. Since verbal employment contracts can easily be subject to ambiguities and evidence problems, we always recommend concluding a written employment contract.
The employer can have a carefully prepared employment contract model, which is used with as few modifications as possible for all employees. In this way, the employer ensures equal treatment of employees and contract management is easier. However, it is good to note that another employer’s model is not necessarily suitable for your own use. The content of the employment contract is influenced, for example, by the employer’s industry, size, and nature of the work.
A written explanation of the key working conditions
It is good to remember that even if there is no written employment contract, the employer must provide the employee with a written explanation of the key working conditions, such as working hours and place of work. A written explanation must be given if the employee’s working time is on average more than three hours per week during a period of four consecutive weeks. The statement must also be given to temporary workers under the same conditions.
Non-fixed term or fixed-term employment contract?
The employment contract can be concluded to be valid indefinitely or for a fixed period. There must always be a justified reason for a fixed-term employment contract initiated by the employer, such as a substitute or a specific project. Particular care must be taken if several fixed-term employment contracts are entered into in a row. A fixed-term employment contract entered into without a justified reason is considered to be valid for the time being. We assist our customers in evaluating the basis for a fixed-term employment and formulating a fixed-term employment contract.
We assist our customers in drafting employment contracts and help the company to tailor an employment contract that best suits its needs.
What is an executive employment contract?
An employment contract which is conclude with an employee in a leading position is called an executive employment contract (manager contract). A manager is in principle in the position of an employee, in which case the mandatory labor legislation is applicable. The exception to this are managers whose position in the employer’s company is so independent, for example due to ownership or being part of the company’s institutional body, that they are not considered to be working under the employer’s management and control. The evaluation of the manager’s employment law status must always be done on a case-by-case basis.
The CEO of a company is an entirely different matter. In principle, the CEO is not in an employment relationship, in which case the labor legislation does not apply, unless otherwise separately agreed. However, there are exceptions, for example, depending on the type of company. Due to the CEO’s position, the terms of employment should be agreed precisely in a written contract.
How does a manager’s contract differ from a regular employment contract?
The managers contract (and the CEO’s contract) often differs from a standard employment contract in terms of, for example, the following conditions:
- Working time – the manager is not necessarily within the scope of the working time act, in which case the law does not apply without a different agreement.
- Salary – the manager’s salary often consists of a basic salary and various incentives, such as a performance bonus.
- Travel and representation – the manager’s duties often include travel and representation, in which case it is good to agree on the reimbursement of such expenses separately.
- Confidentiality, non-competition and non-solicitation clauses – in particular, prohibition of competition is typically associated with manager contracts.
- Severance pay – a manager’s contract quite often includes a severance pay clause that entitles the manager to receive a certain severance pay if the company dismisses him.
- Dispute resolution – in manager contracts, disputes are often agreed to be resolved in arbitration instead of a general court.
We assist our customers in negotiating the terms of an executive employment contract and drafting the contract’s terms in such a way that they meet our customer’s needs, purpose and interests as well as possible. A carefully drafted contract is in the interest of both the company and the manager. Unnecessary disputes are often avoided when important issues have been negotiated and are clearly recorded in the contract. If disagreements have already arisen, we support our customers in negotiating a favorable settlement or assist in a separate dispute process if necessary.
