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An employment contract should benefit both you and your employee

On Behalf of | Apr 29, 2021 | Business Law

As an employer, you want to provide an appropriate work environment for a new hire, but you also want to protect yourself and your company.

To this end, an employment contract contains more specifics than an employment agreement and can better define the employer-employee relationship. There are five basic parts to include.

1. Job requirements

Describe the requirements of the position the new hire will fill. Start with the name of the position, the duties, the hours and the location where the new employee will work.

2. Performance goals

Make your expectations clear as to job performance requirements. If the job is in sales, include the sales volume the company wants to see along with any milestones you expect the new employee to achieve.

3. Compensation

The employment contract must include a section about compensation. Indicate how you will pay the employee: salary, hourly or commission. Explain how you handle expense accounts. If the company has an incentive program, this is where you should state the objectives.

4. Company benefits

The benefits package is always important to a new employee. Describe any insurance plan you offer, such as health, dental or vision. Cover information about profit sharing, retirement plans and stock options. Include information about holidays and vacation time.

5. Length of agreement and termination

Insert the original date of the employment agreement and describe the conditions that apply to both employer and employee to extend or reduce the term of the contract. You must also address the possibility of termination. Explain the process and severance terms.

Other considerations

Consider including a property rights clause or section concerning any intellectual property your company owns. Keep in mind that professional guidance can help you avoid legal missteps in creating an employment contract that benefits both you and your employee.