An Overview on Employment Contracts
At the core of any employment relationship is the employment contract— the agreement that outlines the rights and responsibilities of both the employer and the employee. Employment contracts are crucial in establishing the terms and conditions of employment, ensuring that both parties are aware of their obligations, and providing a legal basis for resolving any disputes that may arise during the course of employment.
In simple terms, an employment contract is a legally binding agreement between an employer and an employee. It typically outlines the employer’s expectations for the employee’s job performance, the remuneration and benefits package that the employee will receive, along with any other specific terms or conditions that may be relevant to their particular situation.
Having a solid employment contract in place is important for both parties. For employers, it can provide a layer of protection in case of a dispute with the employee, and ensure that all employees are aware of what is expected of them from the outset of their employment. For employees , it can provide reassurance that their role is secure in addition to having a clear understanding of the benefits and any problems that may arise in the workplace.
Employment contracts can vary between individuals and businesses, but they typically contain the following components:
- Duration of employment
- Compensation
- Work responsibilities
- Benefits
- Time-off and parental leave
- Termination
- Inventions and intellectual property rights
- Non-disclosure agreements
- Non-compete clauses
- Confidentiality clauses
- Non-solicitation clauses
An employment contract is essential in creating a strong employer-employee relationship. For employers, a contract can protect them against loss of business and help prevent future disputes with employees, while continuing to attract quality candidates. For employees, an employment contract can be an opportunity to land a good position with important benefits, secure a stable income, and create a career path.
Advantages of PDF Employment Contract Samples
PDF is a preferred format for employment contracts and other legal documents because the format levels the field whether you are downloading from a boardroom, a home office, a small office, or a large corporation. Nowhere can you find a format that can be used across so many devices on so many different operating systems and still maintain the document in a consistent and readable fashion. The downloaded document that you see on your computer screen is the same document that your colleague sees at the other end of the country. They see it in exactly the same way that you saw it. The layout is exactly the same and the font is exactly the same. The chances of having garbled text or misaligned graphics in the downloaded document are zero. In fact, once downloaded, the web is no more responsible for the document than it has already been, and every effort is made to ensure that there are no changes once downloaded. The same is not often true of the Word format. In many cases with Word, the document will change format between two downloaded documents if there are changes made to the original document. If you are able to download the Word document from a link, the document may well be in the perfect readable format. However, if you are forwarding the document to someone else, the perfection of the original downloaded document might be lost. When it is downloaded as a PDF document, however, the document does not change when forwarded.
Also, the file size of the downloaded PDF document is often smaller than that of the original Word document, meaning that you can email it more easily without fear of it being identified as spam, plus the added cost of data transfer is also lessened.
No one wants to have to sit through an employment contract that is written several pages long, so the ability to download documents that aren’t too long is also helpful. By downloading only the documents you think you might need in the future, you won’t have to worry about slogging your way through an unwieldy document.
Key Components in Employment Contract Samples
When on the hunt for quality employment contract samples, you should know what to look for in terms of substance. We have already seen that there is a difference between poorly-drafted and well-drafted employment contracts. But when it comes to looking for samples, how can you tell a quality contract from a substandard one? Here are four elements that should be included in any good employment contract:
- Job responsibilities: Leaving out this information in your employment contract is a recipe for legal disaster. Responsibilities should be clearly defined and outlined in the contract to avoid any ambiguity or confusion about the employee’s tasks, role, and expectations. Failing to include this information could lead to lawsuits from the employee down the line. Including this information in your contract also prevents moral problems — employees cannot accuse you of assigning them tasks outside of the scope of their original employment agreement.
- Compensation details: It is a good idea to clearly lay out compensation details in a contract to avoid disputes over pay and bonuses in the future. For example, if there will be a predetermined salary increase after six months of employment, clarify this in the contract.
- Confidentiality: For those who work in sensitive or proprietary fields, maintaining strict confidentiality in the workplace is likely to be a concern. A good employment contract will spell out confidentiality requirements and expectations for the job so that employees know they are legally bound to keep company information under wraps. While it’s generally not a good idea to make confidentiality agreements overly lengthy — that will only make employees view such agreements in a negative light — it’s important to have them in place nonetheless to protect your business from potential liability issues.
- Termination: While there are bound to be many factors that go into a decision on when to terminate an employee (or if you actually should terminate them), putting termination clauses in a contract can help both you and your employee understand what grounds exist for firing. While most of the time, any type of termination can be deemed wrongful or unfair by the employee in some way (particularly in the case of at-will employment, where employers can find themselves in hot water even when firing an employee without just cause), there are still a couple of things you can put into your contract to protect yourself. At the same time, however, you don’t want to come off as overly harsh, as this can scare employees away. Be sure to use a blunt yet fair approach.
Where to Access Credible Employment Contract Samples
Having identified the various components of an employment contract that we discussed in our previous blog entry, you are now probably wondering: "where can I find sample employment contracts which I can use to create my own"? Do not panic – there are many online resources. Besides looking at the Canadian Bar Association or the American Bar Association websites or directly on Provincial Ministry of Labour websites, below is a list of some of our favorite resources for free and premium downloads of employment contracts.
This is the big daddy of all template sites. Paying for a subscription upfront gives you access to all templates that the site has to offer forever. The website is simple to use: click on the state or province of your choice to be redirected to that territory’s list of available templates. From there, you can click on a job position to see if a template is available. If so, you can click on the blue "preview" button to download a watermarked PDF version of the template (a paid version of the template without a watermark is also available).
If you’re looking for a more general template, you may want to consider other options. Google "free employment contract pdf download" or "free employment agreement download." This should bring you a few options, including the very popular first site on the list. As part of its service of providing free downloads of various business agreements, the company provides a generic employment contract template. Like the previous website above, you can see what the professional version looks like before committing to purchasing it.
Even if you’re not positive you’ll want to pay for an employment contract template, you might want to consider this option offered by LawDepot. It’s free to try out, but you will have to pay to download the template you create: it costs $7.50 to create a single document. A monthly subscription (also providing access to a Wills and Power of Attorney template) costs $33.37. As is the case with other subscription websites, go here to select your territory before viewing the list of available templates. In this case, however, you won’t be able to preview the templates without paying for a subscription.
Tailoring Employment Contract Templates
The last thing you want to do is simply fill in the blanks and use a generic form for your specific employee. Sure, these templates are great starting points and can help you avoid reinventing the wheel, but a little extra thought can really make a difference. You may need to add or remove certain sections depending on whether the employee will be working as an exempt or non-exempt employee, have a specialty position or have a unique bonus arrangement.
For example, if the employee is going to be paid on an hourly basis, then terms like sick leave, overtime and hours should be adjusted accordingly, as may even some lump sum provisions. The employee’s job description and responsibilities should tell you what restrictions with regards to covenants not to compete, compliance with corporate policies, confidentiality, intellectual property assignment and trade secrets protections will be needed .
Let’s say your new employee is a senior manager who has access to trade secret information regarding your client relationships and proprietary business processes, and whose duties will require the employee to travel to different states. Your generic employment contract probably won’t be enough to protect you. Time spent tweaking the template to protect your business will go a long way in protecting it from your new employee’s erstwhile competition by conversion, misappropriation and theft.
Also note that while you include in your contract that the employee agrees to comply with company policies, you will want to attach the most up-to-date copy of the policies to the contract so the employee acknowledges same and that they are fully informed of what they’re getting into.
Legal Implications and Common Mistakes
When dealing with employment contracts, there are several legal considerations to take into account. The laws can vary widely depending on the industry and the location. Labor laws and employment standards are the most important aspects to consider when drafting or using an employment contract.
HR professionals and business owners must also keep in mind the specific requirements of their jurisdiction’s labor laws. It is critical to ensure that all contracts meet the legal requirements in order to avoid a contract being voided or challenged in court.
Common legal pitfalls include contracts that contain ambiguous language, missing critical clauses such as an "at will" clause, time-off policies, and compensation clauses, or clauses that are not compliant with local, state or federal law. Additional pitfalls to look out for include:
Contracts that do not allow:
Termination clauses not complying with:
Compensation clauses with generosity triggers
Both employees and employers should seek the counsel of a legal expert in order to ensure the contract provides sufficient protection in the event of a dispute. A qualified attorney will be able to ensure that the contract does not have loopholes or ambiguities that could lead to problems in the future.
Conclusion: Employment Contract “Dos” and “Don’ts”
In this guide, we’ve covered the importance of employment contracts and how to get them in PDF format. We’ve also provided ten examples to help you create your own employment contracts.
Now that you know the significance and process, let’s talk about the best practices when it comes to your employment contracts. First and foremost, it’s essential to ensure the contract is both clear and legally enforceable. Further, the responsibilities and expectations should be outlined on both sides, which includes obligations for the employee and the company as a whole .
The key is clarity and mutual agreement on terms before entering into any employment relationship. Documenting everything in an employment contract, from benefits to non-competition clauses, can help avoid misunderstandings down the road.
It’s also recommended to consult with a legal advisor if changes occur, or if there is a question about the enforceability of any term in the contract. In this way, employment contracts continue to be an invaluable tool for both employers and employees.
