6 Must-Include Items In Employee Contracts

As your business grows, you’ll have the need to hire more employees. This is an inherent part of running a business. No one is exempt from this, unless you’re running a one-person band. But the latter is often impossible, so hiring employees also come with one very important document: the employment contract.

This document should be given much weight in terms of its completeness and accuracy. It is what binds the relationship of employer and employee. Anything not included in the employment contract are aspects of work that neither employer nor employee can bring up into conversation. 

Employee Contracts

This is especially true in the event of disagreements, or when an employee calls for a dismissal lawyer Toronto, or in your local area. More so, it’s through the contract wherein employees are made aware of their rights, and their corresponding responsibilities.

With that said, be sure to include these items in your employment contracts:

1. Job Information

What’s an employment contract without the necessary job information? This refers to the description of the job or position a specific employee holds. This means you should have different employment contracts, due to the varied positions and job descriptions your business has.

A part of this job information should be an explanation of how the employee’s performance will be regularly evaluated, to ensure they’re able to keep up with what’s required of them.

2. Employee Classification

There are different employee classifications today. These differ according to your local laws, and the kind of business you have.

For instance, there are full-time employees paid hourly. Some are contractual employees, while others part-time. If you’re selling a product or service which calls for a per-output payment basis, this should also be indicated on the employee classification.

This is important to include in your employment contract, so as to avoid any lawsuits in the future due to claims for misclassification. Also, it proves that the employee willfully adhered to the specific employee classification their job function falls under.

3. Compensation And Benefits

The employee’s compensation and benefits are often one of the most important aspect of any employment contract. Of course, no employee works for free. And they’ll want to ensure they’re working in an organization where they’re properly compensated. Workers also like the benefits to be competitive enough.

Be sure to specifically and clearly outline what your compensation and benefits package is. This includes items, such as:

  • Annual salary, based on hourly rate or a per-output basis
  • Any added compensation or bonuses on top of the salary
  • Incentives and pay raises
  • Benefits, such as hospitalization or health insurance, among others

The HR or Human Resource manager should be well-versed with these, to avoid any discrepancies and disagreements in the long run.

4. Work Hours And Schedules

If you’re employing freelancers, remote employees, or people working on flexible working hours, the work hours and schedules should be immaterial. This means your employees can sign in to work at any time they please, for as long as they meet the required minimum hours of work, or output requirements.

But in other settings where there are fixed working hours, then be specific about this. Your employees should know, upon signing the employment contract, what their work hours and schedules are.

5. Paid Sick And Vacation Leave Policy

Labor laws across all states and nations have a mandatory paid vacation and sick leave policies for their employees. But the difference here now boils down to the duration, as each state or nation may have their respective standards. So, be sure to check with your own local laws as to what the mandatory paid sick and vacation leave days limit is.

Be sure to lay these out on your employment contract, so it’s crystal clear with your potential employees. This leaves no question or cause of dispute when employees’ absenteeism due to sickness or vacations are longer than what’s allowed. On those days, employees should be made aware those are no longer paid working days.

6. Confidentiality Terms

Depending on the kind of business you hold and the employee’s job description or position, they might need to be bound by confidentiality terms. This refers to the protection relating to trade secrets, business tactics, client data, and intellectual property among others.

For instance, during their employment with your company, your employees are bound by your confidentiality agreement. The same holds true for your non-disclosure agreement, even after the worker’s period of employment with your organization has passed. Of course, these agreements have to be decided upon by your lawyer to ensure they’re still legal. Moreover, the contract should not be asking too much from your employees.

Key Takeaway

In closing, this list isn’t meant to be exhaustive. But these are non-negotiables to have. As you sit down with your lawyer helping you out to draft the employment contract, eventually you’ll come to terms with other items which you must also have in your contract. 

This can differ depending on the needs of your business, and even on the work arrangement you have. Just be sure never to miss out on the essentials. Otherwise, your contract may be incomplete, and may end up usurping on the legal rights of either party.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.