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The best employment contract protects you and your business

If you are just launching a new business or have reached the stage where you need to hire workers, it is time to define the employer-employee relationship.

Here are six tips for constructing an employment contract that sets out equitable working terms for employees and protects you and your company from potential liability.

1. Explain the position

Let the employee know what the position entails and what you expect him or her to do. Describe the main duties, and also include the location where the employee will work as well as the hours of employment.

2. Clarify performance requirements

Here, you should outline performance parameters. List the skills required for this position and the production goals you expect the employee to achieve. Let the employee know you will hold him or her accountable.

3. Define compensation

You must include employee compensation in an employment contract. Identify the base wage and explain the method of payment, whether hourly, salaried or commission. State your overtime policy. Explain the objectives of any incentive program your company may have.

4. Spell out benefits

Be clear about everything included in a benefits package, such as a healthcare plan, holidays, vacations, retirement or profit-sharing plans.

5. Length of agreement

The contract should contain the term of employment along with any conditions that would extend the contract term, reduce or terminate it. You must include termination details, and you will want to make sure the language is clear and that the terms are correct from a legal point of view. You must explain what will take place whether you terminate the employee with or without cause.

6. Covenants and a review

Depending on the type of business you have, you may want to include non-disclosure or non-compete clauses. Here again, you should have legal guidance. Furthermore, once the agreement is complete, you should have an attorney review the entire document to ensure it is fair to employees and provides the proper protections for you and your business.


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