3 Advantages To Using An Employment Contract

by | Sep 14, 2015 | U.S. Private and Emerging Business

employment contract

Employment contracts are of great concern to many employers today. When you decide the time has come to hire new employees, you must determine if you want them to sign an employment contract or be an independent contractor. If you decide that an employment contract is right for your business, be sure and have one drawn up by a qualified business attorney.

There are several advantages to requiring employees to sign an employment contract. The three major advantages to using an employment contract are: 1. They allow you to retain your most valuable employees, 2. They provide greater protection of trade secrets, and 3. You will be able to better manage the expectations of the prospective employee and you as the employer.

Finding and training an employee can be very time consuming and costly.

By having your employee sign an employment contract you will be able to hold on to valuable employees for a specific amount of time as set forth in their contract.

If at the end of the original contract you wish to preserve the relationship, you can place a clause in the contract giving you the option to renew it or re-negotiate it. It should also contain a clause requiring the employee to give a certain amount of notice if they do not wish to renew or if they wish to terminate their employment. Although, you cannot force an employee to continue working for your company, they may be more likely to stay if there is a penalty for leaving prior to the completion of their contract. By having an employment contract you will be able to give yourself time to find and train a new employee without having to make a hasty decision.

If your company has trade secrets, copyrighted material, or other confidential information that you wish to protect then an employment contract is very useful. It can contain a confidentiality clause and or a non-compete clause which prevents the employee from working for a competitor. While you cannot prevent them from working for a competitor forever, you can prevent them from doing so for a certain period of time. The confidentiality clause will prevent employees from sharing what they have learned from your business during their employment.

Employment contracts allow you set specific standards for your employees. These standards can be laid out informing the employees exactly what is required of them and set the grounds for termination, if these requirements are not adhered to.

The contract can contain both moral and ethics clauses along with the general expectations for all employees. Not only should it detail employee responsibilities, but it should also detail employee benefits, compensation, and bonuses if applicable.

Advising an employee on what is expected of them and the compensation they will receive, will create a more satisfied and secure employee.

Further, by having an employment contract you will be able to prevent future disputes that may arise regarding employment issues. Because an employment contract is a legally binding contract, it should be drafted with the help of an experienced business attorney. In addition, if you have received an employment agreement, you should review that with your legal counsel prior to agreeing to all of the terms.

DISCLAIMER: The information contained herein is not intended to be specific legal advice for your particular situation. It is meant to provide general information on the changing landscape of the law. You are encouraged to contact legal counsel for advice specific to your particular legal situation.