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Key matters to address in an employment contract

On Behalf of | Dec 17, 2019 | Employment Law |

Hiring and terminating employees is a significant part of any employer’s job.

And creating an effective employment contract can help employers protect their rights, their business’ interests as well as their employees. These contracts can help businesses avoid considerable hardships down the line.

Here is an overview of some essential elements that employers should include in their employment contracts.

Every business is different

Of course, every business has different goals and needs. Business owners can craft their employment contracts to fit their business’ specific best interests.

According to Inc. Magazine, most strong employment contracts contain similar elements. Therefore, seeing what has worked for other companies may also help business owners ensure that they cover all the most important bases.

What should an effective employment contract include?

Some of the critical things an employment contract should cover include:

  • The employer’s expectations: Employers should ensure they explain the job expectations and the employee’s responsibilities. This description should clearly list the type of employment being offered, as well as the employee’s specific duties and services. Similarly, employers should also explain what types of actions might lead to consequences or termination.
  • Compensation: Employers should also cover how they will compensate the employee for the work they perform. This includes their wages or salary, benefits and severance package offered if the employee leaves the company.
  • Dispute resolution tactics: A dispute resolution clause clearly outlines the process for how both employers and employees will handle potential issues in the future. For example, it might require the parties to attempt mediation or arbitration before taking a legal dispute to court.
  • Non-compete clauses: Including these clauses helps employers to protect their business and their intellectual property. A non-compete clause prevents employees from entering deals or work with direct competitors. Employers must strike a careful balance with these clauses. After all, employers do not want the employee to leave and join forces with a competitor, but they also do not want to make the clause so strict that it scares off the employee from wanting to work with them in the first place.

It might be helpful for business owners to consult an experienced business attorney when drafting these contracts to ensure they safeguard their business, no matter what.