What to Include In An Employment Contract
As a business owner, it's important to have contracts that protect your interests. Having custom contracts drafted specifically for your business can help you avoid negative agreements and safeguard your company. Contracts can be used for a number of different business purposes, including employment contracts. An employment contract can help you set clear expectations and protect your business. When entering into any contract, there are a few key things to keep in mind such as defining key terms, those terms follow state law, and the contract is properly executed.
Make sure all terms are clearly defined and understood by both parties.
In contracts, key terms are clearly marked often by capitalizing the term and providing a clear definition. For example, in an employment contract, key terms may include "Employee," "Position," or "Confidential Information." By defining these key terms, both parties can avoid any misunderstandings about the contract.
An employment contract is a legal document that sets forth the rights and responsibilities of an employer and employee. When drafting employment contracts, it's important to think about all possible outcomes and plan for them accordingly. This includes planning for what will happen if the contract is breached, or if one party can't fulfill their obligations. Consider the need to terminate an employee or an employee chooses to resign. Do you have a plan in place? Is this plan outlined clearly in the employment contract? By planning for these contingencies, you can help avoid any legal disputes down the road.
Be sure that the terms of the contract follow state law.
Each state has different laws governing contracts. It's important to be familiar with the contract laws in your state and to ensure that your contract complies with those laws. Failure to do so could result in your contract being unenforceable.
When creating terms of the employment contract such as pay, breaks, time-off, overtime, and even non-compete requirements, these all have rules surrounding the rights of the employee. Be sure to draft an employment contract that is not one-sided or in violation of the employees rights as this will likely be found unenforceable. Having an employee creates a responsibility on the employer to participate fairly with the employee. Set the right tone for your new employee by drafting an employment contract that is mindful of their rights and offers a reasonable and industry standard of expectations.
Make sure the contract is properly executed.
Even though oral contracts are binding, written contracts are easier to enforce. A contract that is properly executed means both parties to the agreement have signed the contract. In some cases, you may also need to have the contract notarized. Once the contract is signed, each party should keep a copy for their records. Be sure that there are no concerns with pressure to sign a contract.
Additionally, at the time of signing be sure there are no concerns that could cause the contract to be found invalid. One way is if one of the parties was not of legal age at the time of signing. Another way is if one of the parties was not of sound mind, either due to intoxication or mental illness. Additionally, if it can be shown that one of the parties was coerced into signing the contract, this may also be grounds for invalidation. Finally, contracts can also be invalidated if they are found to be illegal or against public policy. If a contract is invalidated, this means that it is no longer binding on either party. As such, invalidating a contract can have significant implications and should not be taken lightly.
Have a qualified attorney draft and review all of your contracts.
Contracts are cause for dispute every day. So often these disputes could have been avoided had the right counsel been utilized by the parties to ensure the contract is well drafted, explained, and properly executed by the parties. Schedule a strategic business call with Hunkin Law to take care of all your contract needs.