Employment Agreement – Requirements, Contents, and Consequences of Missing Agreement

An employment contract does not basically differ from other types of agreements. It is entered into by offer and acceptance, which together create a binding agreement, according to the usual rules of contract formation as we find them in the Contracts Act. The same principles of interpretation are also used when determining the precise content of the agreement.

The distinctive features of the employment contract mainly appear in the overarching rules concerning what it can contain and the conditions and procedures for establishing the employment relationship. These are partly found in the Working Environment Act and partly in collective bargaining agreements, which, through the principle of non-derogation, may have an effect even outside their direct scope.

Requirements for form and content

The written requirement

For employment relationships with a total duration of more than one month, a written employment contract must be issued as soon as possible and no later than seven days after the employment relationship began. For employment relationships of shorter duration, a written agreement must be entered into immediately.

The written requirement is a regulatory provision, but the employer will bear the risk of ambiguity if the obligation is not fulfilled. In case of uncertainty about the content of the employment relationship, the doubt will normally be resolved against the employer. This is particularly important when it comes to questions about temporality and the scope of the position.

Content of the employment contract

The employment contract must contain information about matters of substantial significance to the employment relationship. Central elements include:

• The identity of the parties

• The workplace – if no fixed workplace exists, the agreement must provide information that the employee works in various locations

• A description of the work or the employee's title, position, or job category

• The starting date of the employment relationship

• Expected duration if the employment relationship is temporary

• The employee's right to vacation and holiday pay

• The applicable or agreed salary, any bonuses and other compensation that are not included in the salary

• The daily and weekly working hours

Changes to the employment relationship

Changes to the employment relationship as mentioned in Sections 14-6 and 14-7 of the Working Environment Act must be included in the employment contract as early as possible and no later than the day the change takes effect. This does not apply if changes to the employment relationship are due to changes in laws, regulations, or collective agreements.

Special considerations regarding permanent employment

The main rule is that the employee shall be employed permanently. Permanent employment means that the employment is ongoing and unlimited in time, that the rules of the law regarding termination apply, and that the employee is assured predictability for work in the form of a real scope of position.

Temporary employment can only be agreed upon in special cases that are expressly indicated in Section 14-9 of the Working Environment Act, including:

• When the work is of temporary nature

• For work in place of another or others (substitute)

• For internship work

• With participants in labor market measures

Consequences of violations

If no written employment contract is entered into or the agreement is deficient, this may have significant consequences in subsequent disputes. The employer bears the burden of proof that there are agreements deviating from the normal provisions of the law.

This is particularly important when it comes to questions about:

• Temporary employment – if the employer has not informed that the employment relationship is temporary, it shall be assumed that the employee has permanent employment

• The scope of the position – if the employer has not informed about the scope of the position, the employee's claim regarding the scope shall be assumed

• Salary and other working conditions – uncertainties will normally be interpreted in favor of the employee