Imagine this: you are hiring your first employee and have been interviewing candidates for the role for weeks now. Finally, you have someone that fits the job description perfectly. Phew!
But you are not out of the woods yet.
You will need to write out an employment contract between your company and the individual. This will legally protect the employee-employer relationship. If you have never written one yourself, then you will want to read the article below to see what exactly an employee contract entails.
What Is an Employment Contract?
An employment contract is a legal document that defines the tenets of the relationship between the employer and employee. This way both parties are aware of what their roles and responsibilities are. It also ensures that there is minimal confusion about these items in the future.
Both parties have to agree to the terms of the contract and sign it BEFORE the new hire starts their job. There are many different reasons why you will not want to avoid writing up a detailed employment contract before any new employee is hired.
Why Is an Employee Contract Important?
Not only does the written employee contract protect you legally, but it’s also important for many other reasons.
It defines the income and pay rates for the employee, so there’s no miscommunication about it later. It also defines any annual bonuses, perks, and benefits allotted to the employee.
It protects the employer from the loss of confidential information. This is because the employee is bound by law not to disclose any confidential employer information to anyone outside the company unless required by their job.
It clearly defines how much leave the employee gets. There are many different types of leaves now, like maternity or paternity leave, vacation leave, sick leave, and national holidays.
This assures the employee who knows exactly how much leave they have available. And it also protects the employer from having too many employees off on leave when it’s a busy time at the company.
An employment contract will become your best friend especially when you are dealing with lawsuits from previous or current employers regarding terms stated on the contract. The more clearly you can define everything on the contract, the easier it will be in the future when miscommunication happens.
You can always go back to the document and use it as a reference point to dictate how to deal with employee demands.
What Does an Employee Contract Form Include?
The great thing about writing an employment contract is that it’s pretty defined by law, and pretty consistent through industries and sectors. Let’s see below some of the things you would include when writing one.
Employment details. This includes the job description and the roles and responsibilities of the employee including the team they would work on.
Compensation package. This would include all the benefits, perks, bonuses, and incentives included in the employee’s hiring package. The benefits include items such as dental, medical, eye care, massages, and more.
Vacation contract. For younger generations, this particular item is quite often more important than the overall compensation. So make sure you include in detail all the leave offered to the employee, like sick leave, paid leave, leave due to family emergencies, and unpaid leave.
Probation period. Most businesses have a policy where the employee is on a period of probation (lasting from 3 weeks to 6 months). During probation, their employment could be terminated instantly and without repercussions, if certain conditions are not being met.
Performance reviews. Businesses want to ensure that employees grow with the company. One way you can do that for your new hires is by holding regular performance reviews, either quarterly or monthly. Include the details of these reviews in the employment contract.
Termination. It’s getting harder and harder in today’s lawsuit-heavy world to terminate an employee without extremely valid reasons. Make sure to include in your employment contract details about how termination would work. Also include, how much notice each party would have to give the other when terminating the contract.
Non-competition. This is an interesting clause because it protects the employer by prohibiting the employee from engaging in any competitive activities. The employee isn’t allowed to steal business or clients from the employer to build their own side business.
Use a Template or Hire a Recruitment Firm
If you are writing an employment contract for the first time, you could use a template available online. But if you are doing a slew of hiring and don’t have the time to do it all yourself, then hiring a recruitment firm like Bradford Jacobs (link here) is a great idea.
A recruitment firm can help you find great talent from all over the world, and bring them to your doorstep, without you ever lifting a finger. It can mean that you can focus on sales and strategy for your business, rather than recruiting and hiring, which can be a huge time suck.
An Employer Relationship with Employees Begins with a Contract
Even if writing an employment contract seems like a lengthy and strenuous process, it’s well worth it. It is the sole document that protects you from miscommunication and lengthy lawsuits in the future.
If there’s anything unique about what you are offering the new hire, make sure you include it in the employee contract in detail. This way you can always refer back to the document when issues crop up (as they always do).
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