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What to Include in an Employment Contract
An employment contract is a legally binding agreement between an employer and employee that outlines the terms of the employment relationship. An employment contract can outline everything from the duties required of you as an employee to compensation and benefits. A written contract can help prevent misunderstandings and disputes down the road. If a dispute arises between an employee and employer, the contract is available to help resolve it.
It is essential to include all the necessary information in your agreement so that you and your employee know what is expected of them. Not every detail needs to be included in your initial contact, but there are a few key points that every good employment contract should cover. Here's what to include in an employment contract:
Names Of The Parties
The first thing to include in your employment contract is the names of the parties involved. This may seem like a no-brainer, but it's important to know who the agreement is between. Include the legal name and details of your organization, as well as your employee's full name and address.
Job Title And Description
The contract will state the employee's job title and provide a complete description of their duties and responsibilities. This follows the job title and description specified in the recruitment advertisement and subsequent offer letter. Be as specific as possible so there's no confusion about what is expected of them.
The contract will also specify the start and end date of employment, the employee's work schedule, and sometimes the length of a particular project. If the position is temporary, be sure to include the exact dates that the employee will be working. For full-time or permanent positions, you may want to include language about giving notice before leaving the organization.
The salary is usually one of the employees' most important aspects of the employment contract. It should specify the salary you will pay the employee (salary, wage, commission for sales volume, or some other kind of monetary value). Be sure to include the rate of pay, when, how often they will be paid (weekly, bi-weekly, monthly), and whether they are eligible for raises or bonuses.
The employment contracts must state the types of benefits the employee can receive. This may include the employer's health insurance, vacation days, and other benefits. It is important to be clear about what is offered and how long an employee must work for the organization before they are eligible for certain benefits.
Vacation And Sick Leave
You may include your company's policies for taking days off as part of the contract provisions, such as holiday breaks or vacations and sick or disability leave. You should also state how many vacation and sick days the employee is entitled to each year.
If you want to protect your company's trade secrets or other confidential information, you should include confidentiality clauses, also known as a non-disclosure agreement. These clauses typically state that the employee cannot disclose certain information to your competitors.
When drafting an employment contract, it is important to include provisions for how disputes will be resolved. One way to do this is to require that disputes be resolved through arbitration or mediation instead of going to court. This can help prevent arguments and legal battles down the road.
It is also important to include a clause that details how either party can terminate the contract. This should include what notice needs to be given and any other conditions that must be met. For example, you may require that an employee give two weeks' notice if they want to quit. You may also want to include a clause that allows you to dismiss an employee immediately if they break company rules or engage in misconduct.
Your employment contract may have provisions concerning covenants not to compete. These clauses restrict an employee's ability to compete with your business or solicit your customers after they leave your company. Restrictive covenants can help protect your business's trade secrets and confidential information. However, they must be carefully drafted to be enforceable.
A contract might discuss severance details, which involves any financial amount or other benefits an employee may be entitled to when they leave the job.
What are Some of the Advantages of Having an Employment Contract?
An employment contract can provide certainty and clarity for both the employer and the employee. It can outline expectations, duties, and obligations, as well as set out the consequences of breaches of contract. A written employment contract can also help avoid disputes by providing a clear reference point if there is a disagreement.
An employment contract can also offer protection for the employer. For example, an employee may agree not to disclose confidential information or solicit business clients. This can be particularly important for businesses that have invested heavily in developing their products or services.
In some cases, an employment contract may also help an employee to secure certain benefits or entitlements, such as sick pay or annual leave.
What are Some of the Disadvantages of Having an Employment Contract?
An employment contract may limit the flexibility of both parties to the contract. They must renegotiate the contract's terms if they want to do something different.
In addition, an employment contract can make it difficult for the employee to change jobs, as they may be required to give notice or risk breaching the contract. Finally, an employment contract can tie you to a company even if it is no longer a good fit for you, which can lead to feelings of frustration and dissatisfaction.
It is important to note that an employment contract creates an implied promise to act fairly and honestly in an employment relationship. This obligation is binding on both parties and can have legal consequences if either party breaches the contract's requirements.
What About a Breach of an Employment Contract?
A party commits a breach of an employment contract if they do either one of two things. The first is by failing to do what is promised in the contract. And the second is to do any act prohibited by the contract.
A valid employment agreement can be enforced in a court of law. Some contracts specify different processes for resolving disputes about the contract. It might be stated in the contract that the parties must go through arbitration or mediation rather than turning to a court if one party claims a breach of the contract.
Any party who breaches an employment contract must pay damages to the other party. Sometimes the contract itself specifies the number of damages.
Do I Need a Lawyer to Help with Contract Issues or to Review My Employment Contract?
If you are unsure what to include in an employment contract or have questions about whether a contract is enforceable, you should speak with an experienced employment lawyer. A lawyer can help protect your rights and advise you on any potential risks associated with signing the contract.
If you are an employer, you may want to have a lawyer help you draft your employment contracts. This can help ensure that the contract is legally binding and meets your business needs.
If you have any questions about what to include in an employment contract, or if you need help drafting or reviewing a contract, contact Steven & Company Law Corporation today. We would be happy to answer any of your questions and help you protect your rights. Call us at 1-250-248-8220 or fill out our contact form.
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