If two or more parties reach an agreement without written documents, they will enter into an oral agreement (formally known as an oral contract). However, the authority of these oral agreements can be a bit of a grey area for those who do not know the law of contracts. It is important to remember that there is an agreement as long as there is an offer and acceptance with clear conditions. It does not matter whether it is communicated in a formal legal document, signed and attested, by hand on the proverbial cocktail towel, in an exchange of emails or text messages or orally. Having oral contracts is problematic not only if one tries to justify a breach of conditions, but it can also create situations where a party “violates” the conditions without knowing it simply because those conditions were not clear. In these cases, employers and workers may not have been on the same side. A properly written contract can avoid these situations or, at the very least, help resolve the problem more quickly. There are four important things that need to be done to make an agreement legally binding and enforceable. This applies to all agreements, including oral employment contracts: after all, there are many legal requirements that must comply with employment contracts.
These include the minimum wage, maximum working hours, leave rights, ageing, working conditions and non-discrimination in the workplace. These legal requirements are included in employment contracts. This means that no matter whether they are written or agreed orally, they apply automatically. Employment contracts are often linked to oral statements or information contained in manuals and business guidelines. Implicit employment contracts are created when an employer discusses with a current sponsor or worker the details of work obligations, compensation, benefits and termination of the employment relationship. Similarly, many of the information published in the company`s personnel manual is generally the same as the conditions that the employer would indicate in a written employment contract. To avoid a tacit agreement, an employer must be careful not to make concrete commitments during an interview or a letter of offer of employment. The same applies to all information published in the staff manual. Employers should always state orally and in writing that the employer-employee ratio is at their convenience, which means that the employer or worker can leave the job at any time.
The many pitfalls associated with oral agreements are the reason why employers and employees often consider entering into a written employment contract, either in the form of a letter of offer or a broader employment contract. Some might say that “verbal agreement is not an agreement at all”; But this is imprecise, especially in the context of employment. An oral agreement is just as binding as a written contract – the difference is that the conditions are difficult to prove. Sometimes it is in the interest of workers to have oral contracts, sometimes to their detriment. However, if you are an employer, a properly drafted employment contract is essential. It includes the names of the parties, amounts and methods, expected work schedules, leave and sick leave, up to intellectual property, if necessary, confidential information and confidentiality agreements, insurance expectations and termination of contracts. And of course, the real role of the employee within the company is sketched out.