hire contracts

Why You Need An Employment Contract

Linkilaw Company Law, Employee Regulations

We live in a time when making sure things will get properly done usually means you’ll first sign a properly written contract. Anything you need to do that requires the help of another person or company is usually regulated by a contract – so why would you not pay attention to something as important as an employment contract?


“Upon accepting a new position at any company, even a new position within your current company, always review employment contracts and non-competes. Read them all the way through, and consider having a lawyer read it for you.”

– Laura Pierson, HR Department of Fortune 500


Employment contracts are vital for legally defining the relationship between your business and your employee.  For example, an employment contract will create a strong basis for protecting both your company’s interest and the employee’s specific role in the company.  It will hold details as the employee responsibilities, their health insurance policy, sick days, annual leave days, reasons for why their employment may be terminated, and much more.

Let’s take a look at some compelling reasons why you should give your employment contract a good read.


1. Deciding on Working Time Period and Working Hours

If you run a business that requires specific training and time investment from the company’s behalf then it’s ideal to have an employment contract that binds your employee to follow training programs for a set period of time and continue to be part of the company to get a chance to apply the newly learned skills.

Many businesses can spend a lot in terms of resources when training new employees so it makes sense that you want them to continue working for your company for a specific time period and get an ROI.

Another must-have are clauses regarding the rights of the employee to leave your company or have its employment contract lawfully terminated. A common clause is the period of notice that the employee has to give you before they can leave the company. You can stick to a 90 days notice period or whatever your company feels is necessary to find, hire and train a new employee.


2. Protecting Confidentiality

If you have a business that requires employees to handle sensitive and confidential information then it makes sense you’d get a written contract created. Many companies don’t want their inside information being released to the public, shared on social media or used for other purposes than the company’s one.

Sure, having a nice conversation with your employees on what to share on social media about work and what to keep classified will help, but adding a confidentiality clause in your contract protects your interests and means that you can take legal action against any employees who might harm your business by misuse of confidential information.

3. Define Set Working Standards

Having a contract that defines the standards of each employee is a great way to get the best out of each employee. It’s also a good way to end up attracting the best staff. If you know what kind of standards you want your staff to abide by then adding a clause that defines the expected standards of employees within your company is ideal.

An employment contract governs the behaviour that you expect an employee to abide and it also gives you grounds to add or subtract benefits according to their performance. This is particularly useful when you need to take action towards employees that consistently underperform and do not meet expectations or when some employees perform that well that they just deserve more benefits added. For example, we’re all for offering employees flexible schedules for them to create their own work-life balance.


4. Defining Annual Income and Pay Rates

From the outset, you can set what income your employees will be receiving and how often they work. This can govern full time, part time, casual based workers and individual pay rates for each classification. You can also set what their annual income will be and any bonuses, or basis for bonuses, should you choose to include them.

5. Days Off

Your employees might get sick, need to take holidays, maternity leave, and more. Having a contract means you can make sure that the procedure for taking holidays, sick days, and more is covered legally. This can also define the kind of payment expectations the employee shall receive when they take annual leave, sick leave, and any other days off work.

[tweet_dis_img]Employment Contracts – Why You Need Them[/tweet_dis_img]

Overall, employment contracts give you a good basis for your relationship with your employees, what you can expect from them and what they can expect from you. An employment contract should be tailored to the unique requirements of working at your company and for individual employee’s. They should be written by an employment contract solicitor and cover all necessary bases for employment at your company and should make both sides happy to work with each other.

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