In Papua New Guinea, employment agreements can be categorized into two main types: written contracts and verbal contracts.

Written Contracts

Written contracts are the most prevalent and secure form of employment agreement in Papua New Guinea. The Employment Act 1978 outlines specific requirements for written contracts. These requirements include:

• Minimum Age: The employee must be at least 18 years old to enter into a written employment contract.
• Specifying Particulars: The contract must clearly outline details such as job title, remuneration (including salary and benefits), working hours, leave entitlements, and termination clauses.
• Approval and Attestation: In some cases, the written contract may require approval from the Department of Labor and Industry (DLIR).

Although written contracts provide greater clarity and protection for both employers and employees, they are not legally mandatory.

Verbal Contracts

Verbal contracts, while less preferable, are also recognized under Papua New Guinea's labor laws. However, there are important considerations for verbal agreements:

• Record Keeping: Despite being a verbal agreement, employers are required to maintain a written record of the key terms and conditions of employment.
• Limited Duration: Verbal contracts are generally understood to have a maximum term of one year.

Written employment agreements are crucial for establishing a clear and secure working relationship between employers and employees in Papua New Guinea. The Employment Act 1978 outlines essential clauses that should be included in such agreements.

Core Clauses

• Parties to the Agreement: This section identifies the employer and the employee, including their full names and contact details.

• Position and Duties: A clear description of the employee's job title, key responsibilities, and reporting structure should be outlined.

• Commencement Date and Term: The agreement should specify the start date of employment and the duration of the contract, whether fixed-term or indefinite.

• Remuneration and Benefits: This section details the employee's salary or wages, payment frequency, any allowances, bonuses, and other benefits such as health insurance or superannuation (if applicable).

• Working Hours and Leave: The agreement should specify the standard working hours, overtime arrangements (if applicable), and details regarding leave entitlements such as annual leave, sick leave, and personal leave.

• Termination: This clause outlines the process for termination of employment by either party, including notice periods, severance pay (if applicable), and the grounds for termination with or without cause.

Additional Considerations

• Confidentiality: Confidentiality clauses can be included to protect the employer's sensitive information or intellectual property.

• Intellectual Property: Ownership rights over any intellectual property created by the employee during the course of employment can be established in the agreement.

• Dispute Resolution: This clause outlines the process for resolving any disagreements that may arise during the employment relationship.

This is not an exhaustive list, and additional clauses can be included depending on the specific needs of the employer and employee. Consulting with a lawyer experienced in Papua New Guinean employment law is highly recommended to ensure the agreement complies with all relevant legislation and adequately protects the interests of both parties.

In Papua New Guinea, the Employment Act 1978 does not specifically mandate probationary periods in employment contracts. This leaves the inclusion of probationary periods at the discretion of employers. Despite this, probationary periods are a common practice in the country and can offer benefits to both employers and employees.

Benefits of Probationary Periods

From an employer's perspective, probationary periods allow for the assessment of an employee's suitability for the role, their skills, and their work ethic before confirming them in a permanent position. On the other hand, employees can use probation periods to demonstrate their capabilities and adjust to the new work environment.

Probation Period Considerations

While probationary periods offer advantages, several considerations should be taken into account:

• Fairness and Transparency: If a probationary period is included in the employment agreement, it should be clearly defined, outlining the duration, expectations, and the process for confirmation or termination.
• Standard Duration: There is no legal standard duration for probationary periods in Papua New Guinea. However, most employers typically implement a probation period of three months.
• Termination During Probation: During the probation period, the termination process is generally less stringent for both employers and employees. However, reasonable notice should still be provided.

In Papua New Guinea, employment agreements can incorporate confidentiality and non-compete clauses to safeguard an employer's legitimate business interests. However, understanding the legal intricacies of these clauses is crucial.

Confidentiality Clauses

• Limited Statutory Guidance: The Employment Act 1978 does not contain specific provisions governing confidentiality clauses.

• Legal Enforceability: Despite the absence of specific legislation, confidentiality clauses can be incorporated in employment agreements and may be enforceable by courts if they meet certain criteria. These criteria typically involve ensuring the clauses are reasonable in scope and duration, protect only the employer's legitimate business interests, and do not unduly restrict the employee's ability to work in their field.

• Focus on Specific Information: Confidentiality clauses should explicitly define the confidential information the employee is required to protect. This could encompass trade secrets, client lists, or sensitive business plans.

Non-Compete Clauses

• Restricted Application: Papua New Guinea law imposes limitations on the enforceability of non-compete clauses. Courts are generally hesitant to uphold non-compete clauses that extensively restrict an employee's ability to secure future employment in the same field.

• Permissible Scope: Non-compete clauses may be deemed enforceable if they are narrowly tailored to protect specific legitimate interests of the employer, such as safeguarding confidential information or clientele developed during the course of employment for a limited period of time and within a reasonable geographic area.