When you hire a new employee, you will have them sign a variety of forms and documents before they start their position, including an employee contract.
This contract can protect your business by outlining exactly what is expected of the employee and can serve as documentation in case you need to later terminate their employment.
Because of this, it’s essential to consult a business attorney to determine what needs to be included in a contract.
Items to Include in Employee Contracts
All employee contracts should include the following information:
- Job information: Make sure you define the role and responsibilities. This should include the job title and description, what department the person will be in, who they report to, role requirements, skill requirements, and any additional requirements.
- Compensation and benefits: A key item to include in the contract is the employee’s compensation and benefits. This should state their annual salary or hourly wages, any raises or other incentives they can achieve, health benefits, retirement packages, a signing bonus (if applicable), stock options (if applicable), and other benefits offered by your company.
- Time off policies: Contacts should also state how much vacation and sick time the employee is allotted, and how those days or hours can be accrued. It can also include how those days off must be requested and who needs to approve them. You can include sick leave and family medical leave or emergency situations in this section, or you can address it in a separate section, as well.
- Classification: This might seem obvious, but it’s important to document if the person is an employee or a contractor. This is important to protect your company legally later. How an employee is classified will impact their benefits and tax filings.
- Schedule: Make sure the contract states if it is a full-time or part-time position. It should also state if this is an ongoing position or if it’s only for a set time, such as seasonal help. This is also the area to state if there are specific hours the person needs to work, or certain days they need to be available to work (such as if the position requires weekend work). Putting this in the contract makes it clear to the employee if this is a long-term or short-term job, and what the schedule expectations are.
- Confidentiality: It’s essential to include a section on confidentiality, privacy, and responsibility in employee contracts. This protects your company to ensure the person cannot take your trade secrets and share them with others. If they do, it provides legal backing for you to use against them. This is also an area where you can include non-compete agreements.
- Termination: Including termination policies in your new-hire contract can seem dark, but it’s necessary. Including what can lead to termination, what’s required for either party to terminate employment, and how terminations and severance are handled can protect your company if you and the employee need to later part ways. You can also include any mandates they must follow after leaving your company in this section.
Creating employee contracts can require a lot of detail and legalese to ensure they are accurate and contain the right information. Hiring a business attorney to help create these documents can benefit your company.
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