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The Basics of Employment Contracts

On Behalf of | Feb 16, 2018 | Business Law, Employment Law

An employment contract protects the interests of both the employer and employee, while stipulating the working responsibilities and overall environment the employee should expect. Here, the business law attorneys at Snee, Lutche, Helmlinger & Spielberger explain the basic components of employment contracts.

Stipulate the Responsibilities of The Position

One of the most important parts of any employment contract is a thorough explanation of the responsibilities of the position a prospective employee is seeking. Be sure to also include the formal title of the position, as well as the place and hours of employment. It is important to use very specific and concise language in this section, so that a prospective employee has no doubts about what to expect.

Establish the Length of Employment

A prospective employee must know how long they can expect to be employed at your company, should they meet the requirements and goals of their role. Furthermore, an employment contract should also explain the protocol for either extending, reducing or terminating the contract term.

Inform Prospective Employees of Performance Indicators

Prospective employees deserve to know how their work will be measured and judged—include in the contract a list of performance indicators and measurements that you will use to grade your employee’s ability. These may include production goals, revenue enhancements or sales volume expectations, although each business will vary in how they rate their employee’s performance. When determining performance indicators, make sure they are measurable, achievable and explicitly explained.

Include Their Compensation

Another key component of an employment contract is a section stipulating how the employee will be compensated. This should include the base wage, if applicable, as well as the method of payment, whether it be hourly, salaried or commission. Be sure to explain your overtime policy within the contract, as well as any incentive programs you may have. If the position involves commission pay, include the percentage, how draws against commission are handled and how pending contracts are handled if the employee is terminated.

Discuss the Benefits Included With Employment

One of the best ways to look attractive to prospective employees is to provide benefits, such as health, dental, vision or other insurance—as such, include such language within their contract. If employees must pay a portion of benefit premiums, include what percentage this will be. Holidays, vacations, stock options and any other benefits available should also be explained.

Provide Information Regarding Termination

An uncomfortable, but no less important aspect of an employment contract is information regarding termination. Define termination with and without cause, and if severance pay is applicable, provide the terms in each instance. The language you use to craft this section of the contract must be very precise, to protect both the employer and employee, and prevent future lawsuits.

How SLH Can Help You Craft the Right Employee Contract

Because an employee contract is enforceable, it is critical to ensure it is written in exactly the way you intend. To prevent lawsuits and other difficulties, have an experienced employment law attorney assist you in creating and drafting the right contract for you, your company and your prospective employees. The employment law attorneys at Snee, Lutche, Helmlinger & Spielberger want to help you avoid legal misfortune by drafting legally sound and viable employee contracts—contact our office today to learn how SLH can help.