Advice When Using an Employment Contract Template
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An employment contract helps both employers and employees know what is and is not expected of them. Making the terms of the contract clear and in line with local employment laws is essential.
In This Section We’ll Cover:
- What’s Included in an Employment Contract Template
- Important Clauses
- Best Practices for Customizing Employment Contract Templates
- Related Resources
- Mistakes to Avoid
- Finalizing the Contract
What’s Included in an Employment Contract Template
In an employment contract you will have:
- Job information
- Time off
- Employee classification
- Schedule and employment period
- Termination terms and conditions
Important Clauses for an Employment Contract Template
As you customize an employment contract template, look for these important clauses:
- Previous Agreements Clause – This clause stipulates that the employee is not under any previous agreements that would limit them from performing the work as outlined in the employment contract. This includes non-disclosure or non-compete agreements.
- Time Frame – The contract needs to indicate a time frame. At-will employment is one that does not have a specific termination date, while a contract with a probationary period has a period of time when the employee is proving his or her worth.
- Duty of Loyalty Clause – This clause stipulates that the employee has a duty of loyalty to the employer and the employer’s business. It will outline the extent of that duty of loyalty and any other entities covered by it, such as customers of a business.
- Non-Disclosure Clause – Many businesses have confidential information that employees are privy to. This clause dictates what information needs to remain confidential, and it will clearly define that information.
- Non-Solicitation Clause – This clause prohibits the employee from soliciting other clients or employees for his or her own business efforts if they leave the employment of the company. In other words, if an employee leaves to start his or her own business, the clause prohibits them from taking clients with them for a set period of time.
- Statements Clause – Including this clause protects the business because it prohibits employees from making negative written or oral statements about the employer, other employees, agents, or representatives.
- Non-Competition Agreement – This clause, also called a non-compete clause, places a time limit on when an employee can do work that is similar to their job with the employer after leaving the employment.
- Remedies and Enforcement Clause – This clause will indicate what steps the employer will take if the employee breaches the provisions of the original contract.
- Consideration Clause - The consideration clause indicates the value both parties bring when signing the contract. For the employee, they bring their work to the agreement, and the employer brings the salary and benefits of the job, outlined elsewhere in the contract.
Best Practices for Customizing an Employment Contract Template
When customizing an employment contract template, these tips will help:
- If changing any clauses to fit your business and employment structure, consider carefully that you do not remove important protections.
- Consider a technology privacy disclosure if your employees will have access to technology within the business.
- Make everything clear before signing.
- Get it signed securely. You can use Nitro Sign to collect signatures securely and remotely.
Mistakes to Avoid When Customizing an Employment Contract Template
There are some mistakes that can make your employment contract less beneficial. Try to avoid these:
- Not following state and federal laws. Your contract is legally binding, but it cannot circumvent employees’ rights defined by federal and state laws, which is why using a pre-made contract template for your state can help.
- Misclassifying employees. Make sure the employee is classified as an employee, not an independent contractor.
- Not stating the responsibilities of both parties. Both the employer and the employee should have responsibilities in the employment contract, so account for these.
Finalizing the Contract
The final step in using an employment contract template is to get it signed. Nitro Sign makes it simple to send important contract documents and collect legal signatures, so you can get started with your new employee as quickly as possible. Start your free trial today to learn more about how this works.