Before diving into what an employer should include in an employment contract, it may be helpful to understand what an employment contract is first, and why an employer needs an employment contract with its employees.
An employment contract is a type of agreement formed between an employer and an employee that sets out the specific terms of their employment relationship, such as wages, responsibilities, and the length of employment.
One of the most important reasons for why an employment contract is essential for employers to have is because they can limit legal troubles that might arise between employers and their workers.
For example, if there is a dispute over how much a worker should be paid or what tasks they are responsible for on a daily basis, rather than going to court to settle the matter, the parties can first refer back to their initial employment contract.
An employment contract can be created in the following ways:
- Written: It can be a written document that lists the basic requirements of the position, as well as whatever other terms the parties agreed on;
- Oral: The terms can be orally agreed upon, as opposed to written (note that having a written copy is recommended because it is much more reliable when it comes to disputes or legal matters); or
- Implied: This can be a combination of both written and oral provisions to form the parties’ employment agreement. For instance, the parties may put down wages and major responsibilities of the worker, but may verbally agree to minor things like taking out the worker’s personal garbage on a daily basis.
One final important thing to know about employment contracts is that the most commonly used type of agreement is called an “at-will” employment contract.
These agreements describe the status of the employee (i.e., an “at-will” employee), and stand for the principle that the employee may terminate the worker at any time without cause, or alternatively, the worker may resign whenever they desire for any or no reason at all.
What Should I Include in My Employment Contract?
Although some employment contracts are formed through negotiations between both parties, many employers create their own basic employment agreement before any employee is ever interviewed or hired. This is to ensure that they capture whatever is necessary or important for the job and their company.
An employment contract often varies depending on the job position. In general, however, an employment contract will typically address the following items:
- The title and description of the job;
- A start date, regular work schedule, and sometimes an end date;
- Whether the position pays a salary or hourly wage, and the amount;
- A list of benefits or perks included as part of the compensation package for the position;
- Whether or not there is a probationary period, and if so, what the length of the probation period is (usually around 3 months or 90 days);
- How much vacation time is offered and what holiday breaks an employee has;
- The policies describing sickness or disability leave;
- What the employer’s disciplinary procedures are for an employee in violation of them;
- If there are any non-compete or non-solicit provisions;
- Confidentiality clauses (this is especially true when working with secret formulas or recipes that only the employer and company workers are privy to); and
- Finally, the requirements for notice and termination procedures.
Again, the above list is only a basic foundation of what is generally laid out in an employer’s initial employment contract. The employer and an employee may work-out other additional requirements as they see fit, as well as also renegotiate any needs that arise as the company grows or the employee’s position changes over time.
Depending on the position and the type of company, the employment agreement may also include other various terms that are required by both state and federal laws.
Lastly, the best way to ensure that the employment agreement is legally enforceable and contains no violations, is to hire an employment attorney to draft and review it.
What are Some Benefits of Creating an Employment Contract?
As discussed above, it is beneficial for an employer to have a solid employment contract to avoid any future legal disputes with their workers. This document ensures that if a legal dispute occurs, then the employment contract may be used as evidence to support the employer; assuming of course that the contract is valid.
Some instances where an employment contract may be used as evidence to support an employer include:
- A lawsuit for breach of contract;
- Wrongful termination claims;
- Breach of confidentiality clauses (e.g., leaking trade secrets); and
- Various other types of independent claims that may arise on a case to case basis.
Do I Need an Attorney for Help with Issues Concerning My Employment Contract?
Regardless of whether you are an employer or an employee, it is always a smart idea to have an experienced contract lawyer draft and review your employment contract.
Hiring an employment lawyer to draft and review your employment contract will ensure that it is legally enforceable, is not in violation of any employment laws, and includes all of the provisions that are important to maintaining a successful working relationship between the parties.
Additionally, a lawyer can also assist in negotiating the terms of your employment contract, or alternatively, renegotiating your contract if there is a change in your employment circumstances.