What should you include in your employment contracts?

| Jul 22, 2020 | Business Law |

If you built your business from the ground up, chances are good that you only had a handful of employees at first. Many of them may have been part of your family or broader social network, which meant you felt comfortable relying on verbal contracts or using boilerplate documents you downloaded off the internet.

As you grow, however, you will need to consider developing new employment contracts when you hire people or move them into more significant positions. The more established and successful your business becomes, the more important it is to protect your company from employment claims that could have financial implications and also damage your reputation.

A contract with your employees can prevent miscommunication or unmet expectations that could lead to lawsuits. What do you need to include in an employment contract?

Contracts should be business-specific and even position-specific

The more specific your contract is, the better defined your relationship with your employees will be and the easier it will be to take the right actions in difficult situations. You may want to create slightly different contracts for different positions within your company instead of using a one-size-fits-all solution.

Explicitly outlining job expectations and disciplinary procedures for the company in your contract is usually a good idea. Having policies included about harassment, reporting harassment and other workplace issues is also smart. You may want to include expectations for your staff members, including attendance policies and what happens if they get convicted of a crime or cause an uproar on social media.

Discussing issues related to job termination or how an employee leaves the company also matters. For example, you may include a clause that offers severance in the event that a worker provides a specific amount of notice and ensures the smooth transition of responsibilities to their replacement.

Skilled and educated positions may require additional documents

As people’s titles become more prestigious and their compensation expectations grow higher, the risks they potentially pose your company increase as well. An executive or somebody with access to your company’s trade secrets can do substantial damage if they provide that information to others or decide to start a competing company.

Including non-disclosure and non-compete agreements in contracts for certain professionals will protect your company and give you the right to seek recourse if somebody behaves unscrupulously and potentially endanger your business.