A strong employment contract protects you, the business owner, as well as the executive or employee you hire if something threatens the professional relationship you share. Not all professional relationships last the long haul, so the more steps you take to protect yourself, the better your chances of avoiding potentially costly litigation.
According to Inc., many employment contracts address similar matters and share the same elements in common. When drafting yours, consider covering the following.
Duties and payment terms
Your employment contract should spell out exactly what you expect of the new hire in terms of day-to-day duties. It should also explain how you plan to compensate the employee for the work performed.
You may also want to take this opportunity to address what actions constitute grounds for termination. This is a critical section of the employment contract, because it may help prevent future wrongful termination claims, which are often costly and time-consuming.
Drafting a noncompete clause may prove tricky because you want to protect yourself against the employee leaving your company and taking your trade secrets or other valuable information elsewhere. However, you do not want to limit the employee so much that he or she questions whether to accept your position at all.
Severance terms cover what you plan to do for the employee in the event you must let him or her go. Do you plan to offer the worker severance pay or bonuses? How do you plan to handle health insurance under these circumstances? Whatever you decide to do, be sure to outline the duration of the severance agreement when creating this section of your employment contract.
More about employment contracts is available on our webpage.