An employment contract is an essential document for businesses during the hiring process. It serves several purposes, such as reducing liability risks for employers and informing new employees of company expectations.
You shouldn’t wait until the day you’re hiring an employee to think about drafting a contract. Instead, learn about creating employee contracts in advance with the help of this post!
What Information Should an Employment Contract Include?
Before drawing up a contract, it’s important to make sure you know what information to include. Having all the details on hand will allow you to draft the contract swiftly, without having to pause to research the details. Consider the:
- Position details, including responsibilities
- Contract duration
- Schedule
- Salary/wages
- Benefits
- Confidentiality
Depending on the position, you may want to include additional employee contract terms, such as termination details, severance pay, and a non-compete agreement.
Step One: Title the Contract
As with any other document, an employment contract should begin with a title. The title should be clear and simple. For example, “[Company Name] Employment Agreement” is sufficient.
Step Two: Specify the Parties
Employment contracts must state the parties involved in the agreement. The first party is the company, so be sure to include the full legal name of the business. The other party is the employee, and the contract should use their full name.
Step Three: List the Terms and Conditions of the Contract
All employment contracts should have terms and conditions, the minimums of these set by the state and federal governments. Be sure to check the laws in the state your company operates in to ensure compliance.
This section is where you’ll include working hours, salary details, the contract duration, benefits, the dress code, and any other relevant information.
Step Four: Detail the Employee’s Responsibilities
This step is important because it confirms the employee knows what they are agreeing to when accepting a position. You should list their duties, even assigning a rough percentage to each, so they know how their time will be distributed at the company. For example, for a cashier or retail assistant position, you may include something like:
- 60% working the cash register and bagging goods
- 20% managing stock and inventory
- 20% organizing and tidying the store
If you prefer, you can leave the percentages out of the contract, but do make sure to list all the responsibilities.
Step Five: Make Compensation Clear
In order to avoid confusion, the contract should make the new hire’s compensation clear. Explain how the employee is compensated, whether by the hour, week, or month. Don’t forget to include the calculation for overtime pay.
Another important aspect to remember is holidays, so list any that are paid. If the employee receives quarterly or annual bonuses, describe these as well.
Lastly, state the payment method (whether check or direct deposit) and frequency. Most companies pay every week, but if yours only pays once a month, don’t forget to mention it in the contract.
Step Six: Revise the Contract and Seek a Professional Opinion
After you’ve drafted a complete contract, go back over it and revise the wording as needed. Contracts should use specific terms and be in formal language.
It’s always a good idea to seek the professional opinion of a contract lawyer. Doing so can protect you from litigation in the future, so it’s worth the expense.
Make the Employment Process Easier With a Contract Attorney!
Although drafting an employment contract may seem like a daunting task, it doesn’t have to be complicated. The tips in this post can help you! If you still need more assistance, get in touch with a contract lawyer.
Would you like to learn more helpful information for businesses? If so, browse through more of the content on our website related to business!
