Old Employment Contracts Are Becoming Visible: Mistakes Employers Should Eliminate
For many years, numerous companies have kept employment contracts in paper form, either in employees’ personal files or in separate folders. Some of these contracts were prepared years ago, while the employee’s position, salary, place of work or responsibilities subsequently changed without the relevant documents being updated. As long as these contracts remained inside the organisation, such inconsistencies often went unnoticed. However, the introduction of a digital system for employment contracts is changing the situation. The information contained in old documents must now be compared with the employee’s actual working conditions, registration records and accounting data. Under a decision of the Government of the Republic of Armenia, employers are required to enter into the digital system those employment contracts that were not previously concluded through the system. Therefore, reviewing old employment contracts is no longer merely a matter of internal discipline.
Considering these changes, employers should eliminate several inconsistencies in employment contracts that may not have caused problems in the past.
1. The Salary Stated in the Contract Does Not Match the Actual Payment
One of the most common problems is the difference between the salary stated in the employment contract and the salary actually paid to the employee. For example, an employee’s salary may have been increased several times, but no supplementary agreement was prepared. The new amount is already reflected in the accounting software, bank transfers and tax reports, while the old salary remains in the employment contract. This discrepancy may raise questions about the date on which the salary changed and the legal basis for that change. Employers should therefore review not only the current salary amount but also the entire history of salary changes. The company should have the relevant supplementary agreements or employer’s legal acts, and the dates of those documents should correspond to the actual payroll calculations.
2. The Employee’s Position Was Changed Only Verbally
In small and medium-sized businesses, employees often take on new functions over time. An assistant becomes a specialist, a specialist becomes a department manager, or a sales employee begins performing warehouse or customer-service duties as well. However, the employee’s original position may remain unchanged in the employment contract. This difference is important not only because of the job title itself. The employee’s responsibilities, limits of liability, performance evaluation criteria, material responsibility and occupational safety requirements may all depend on the position. When the work actually performed does not correspond to the employment contract, the employer’s position may become weaker in the event of a dispute.
3. The Employee’s Duties Are Described Too Generally
Many old contracts contain wording such as “to perform the director’s instructions” or “to perform other duties arising from the position.” Such wording does not replace a clear description of the employee’s main functions. The employee should understand what work they are required to perform, while the employer should be able to demonstrate which tasks fall within the scope of that particular position. Where the company has job descriptions, those descriptions should correspond both to the employment contract and to the employee’s actual working processes. Otherwise, in the event of a disciplinary issue or employment dispute, it may be difficult to prove that the employee failed to perform a duty that was genuinely part of their position.
4. Working Hours in the Documents Differ from Reality
An employment contract may provide for a five-day working week from 9:00 a.m. to 6:00 p.m., while the employee actually works shifts, follows a flexible schedule or works remotely. In some cases, the organisation also operates on Saturdays, but this arrangement has not been properly regulated either in the employment contract or in the company’s internal rules. Employers should review the working and rest schedule, breaks, shifts, overtime arrangements and working-time records. The fact that employees may have accepted the existing arrangement for years does not remove the need to document it correctly.
5. The Place of Work Is Stated Incorrectly
In recent years, many employees have started working from home, from another branch or under a hybrid working model. However, old employment contracts may still state the organisation’s registered office or another address that the employee hardly ever visits. An incorrectly stated place of work may create difficulties in relation to work organisation, employee attendance, performance of the employer’s instructions and the assessment of incidents that occur during working hours. Where the work is remote or hybrid, the company should clarify the rules relating to communication, reporting, use of equipment and reimbursement of possible work-related expenses.
6. A Fixed-Term Contract Continues for Years
Some employees are hired under fixed-term employment contracts that are subsequently extended repeatedly without reconsidering the legal basis for using such a contract. Employers sometimes choose a fixed-term contract simply because they believe this format provides greater protection or flexibility. However, the type of contract should correspond to the actual nature of the employment relationship. Where the work is permanent, the position forms part of the organisation’s ordinary activities, and the employee has performed the same functions for several years, the employer should reconsider whether the continued use of a fixed-term contract is justified.
7. The Probation Period Is Documented Incorrectly
Some old contracts continue to contain a probation clause even for employees who have already worked for the company for a long time. In other situations, the employment contract does not mention a probation period at all, but the employer believes that the employee can be dismissed during the first three months for failing to pass probation. A probation period should be clearly established when the employee is hired and should be applied only under the conditions permitted by law. It cannot be added later or used as a general and simplified basis for terminating an employment relationship.
8. The Contract Does Not Correspond to Accounting and Tax Data
HR documents are often treated as something separate from accounting. In reality, they are different parts of the same process. The salary specified in the contract, the employment commencement date, the working schedule, leave and additional payments should correspond to the employee registration record, payroll calculations, bank transfers and tax reports. Once an employment contract enters into force in the digital system, the information contained in it may also be used for subsequent registration and accounting processes. Therefore, incorrect or outdated information in the contract may affect later records as well. This is where the role of professional Accounting Companies in Armenia becomes particularly important.
Experienced Accounting Companies should not only calculate salaries and submit tax reports. They should also identify situations in which accounting data does not correspond to the legal basis established by employment contracts. High-quality Accounting Services in Armenia should include informing the employer in advance about such discrepancies.
How Should the Contract Review Be Organised?
The best approach is not simply to enter the contracts into the digital system one after another. The employer should first prepare a list of all active employees and compare the following information and documents for each employee:
- - the employment contract;
- - supplementary agreements;
- - the employer’s legal act on hiring;
- - the employee registration record;
- - the employee’s current position;
- - the employee’s salary;
- - the working schedule;
- - the place of work.
Any errors identified should be corrected in a legally appropriate manner. The employer should not simply change the text of an old contract or prepare documents with retroactive dates. Changes should be documented using the actual dates and should correctly reflect the conditions currently in force. Where necessary, the company should also address gaps in documents relating to previous periods. The digital system is intended not only for concluding employment contracts but also for recording amendments and additions to contracts and the termination of employment relations. Documents are prepared and signed electronically within the system.
Conclusion
When old employment contracts are transferred to the digital system, mistakes that may have remained hidden in company folders for years can become visible. An incorrect salary, an outdated job title, unclear responsibilities, working hours that do not correspond to the actual schedule, and differences between HR and accounting records can result in employment or tax risks.
The best solution for an employer is not to enter the contracts into the system at the last moment without reviewing them. A more appropriate approach is to conduct a complete review in advance, compare HR documents with accounting data and begin the digitalisation process only after the inconsistencies have been identified and corrected.
Professional Accounting Services in Armenia and legal support can help employers not only comply with the requirements of the digital system but also prevent future disputes, recalculations and possible penalties. In this process, Accounting Companies in Armenia should act not merely as organisations that submit reports, but as business partners that identify employment and tax risks in a timely manner.
