6 Essential Things an Employer Should Include in an Employment Contract

HR Manage discussing employment contract

One of the most important things to think about when developing your own business is the employees you have around you. Your workforce will very much dictate how your business expands and succeeds, as they are the very core of the company. Ensuring that you hire the appropriate individuals to work for your business is crucial so that you know that you can trust them and that they will do a good job.

Although when building a business you will have many aspects to be concerned about, one thing that many entrepreneurs end up forgetting is the need to devise an employment contract for their workforce. As you may be aware, every employee should sign and receive a copy of an employment contract, which will evidence that they work for the company, and will also entail what is required of them. In this article, we will discuss six essential things an employer should include in an employment contract.

1.  Job Description

The very first thing you should include in your employment contract is the job description. As mentioned above, this document will evidence that the employee has the job. Therefore, it should have a full description of what the job is, it should also include the title, and what will be required of the employee. This paragraph should also mention which department the employee will work with and who their line manager is.

2.  Compensation and Benefits

Every employer should offer their staff certain compensation and benefits as part of their job. Doing this ensures that employees feel taken care of and it will reduce the chances of staff turnover. This section should specifically describe what benefits the employee is entitled to. This includes the annual salary and the hourly rate, detail about raises, bonuses, or incentives, and the process behind getting these. You also detail what the benefits plan contains, how much it can be expected to be paid by the employer, and what percentage the employee will have to pay. You can even add details about pension and retirement accounts.

3.  Time Off Policy

Employees will require time off at some point during the duration of their employment. Whether that is time off because they are sick, pregnant, or to deal with family emergencies. It is important that you set out in the employment contract what will be authorized and supported by the company and paid for, such as paid maternity and paternity leave and how many paid vacation days each employee is entitled to.

4.  The Schedule and Employment Period

The contract between you and your employee should detail how long the employment is for. Some jobs advertise for a fixed-term period, meaning that at the end of the role the employee would lose the job. This must be specified in this section of the document whether you devise your own document or you use automated employment contracts. Every contract should have a date of when it is meant to end so that there is no confusion with this. In addition to this, you should also detail how many hours the employee is expected to work and whether there is the possibility of flexible working and working from home. This helps the employee know what is expected of them.

5.  Confidentiality and Privacy Agreement

Every company has sensitive data which may be disclosed to individuals during their time with the company. The employment contract should include a confidentiality and privacy agreement that sets out what is expected from individuals. It is important that people understand how to manage confidential data they deal with as part of their role in order to keep it as safe as possible. Unfortunately, data breaches happen often due to employees not understanding what is required of them, and this can have severe impacts on businesses.

Letter of job termination

6.  Termination Terms and Conditions

A contract should be in place to benefit both parties. When you hire someone, you won’t know whether they are a good match for the company in the long term and they do not know whether they will enjoy working for your corporation. For this reason, the employment contract should detail the termination process. First of all, there should be a probation period in place, which is the time where both you and the employee will be able to see whether both parties are content with each other. You should then detail what happens in the case of one of the parties wanting to terminate the contract.

Putting a contract in place between you and your employees is essential so that you both know what is expected from each other. This is essentially a set of rules you should both follow. If you want to devise a good quality employment contract, make sure to include the essential things discussed on this page.

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