What is a best practice when it comes to an employment contract?
To help you adopt the best professional standards for employment contracts, we asked hiring managers and business leaders this question for their best insights. From being transparent upfront about all aspects of the contract to using straightforward contract language, there are several tips that should serve as your best guide for handling employment contracts when you sign up new employees for your organization.
Here are 11 employment contract best practices these leaders follow in hiring new employees:
- Be Transparent Upfront About All Aspects of the Contract
- Cover the Non-Disclosure and Non-Compete Clauses Well
- Lay Out the Duties for the Role Clearly
- Specify the Period of Employment and Work Hours
- Keep Contracts Current
- Clearly Outline Any Opportunities for Monetary Benefits
- Have Clear Termination Details
- Include All Detailed Information for Mutual Accountability
- Define Your Working Model and Expectations Clearly
- Get the Contract and All Details to the Employee in a Timely Manner
- Use Straightforward Contract Language
Be Transparent Upfront About All Aspects of the Contract
An employment contract should not be something unfamiliar to either the employer or the employee. Oftentimes, hiring and HR managers can be vague about the details of an employment contract. Sure, your new hire needs to know their start date, but there’s a lot of fine print in the employment contract that should be discussed before signing. By being this transparent up front, you’ll leave much less room for confusion, frustration or resistance when onboarding, or even later.
Eric Elggren, Andar
Cover the Non-Disclosure and Non-Compete Clauses Well
Every business has the right to protect itself from harm when it comes to hiring employees and the non-compete and non-disclosure clauses you add to your employment contract go a long way in protecting your rights. A comprehensive non-disclosure clause helps in protecting your intellectual property right as well as every other bit of information related to elements ranging from your processes and operations to company structure. A solid non-compete clause offers protection to your workforce, keeping your organization safe from the dangers of poaching or the practice of irresponsible quitting.
Riley Beam, Douglas R. Beam, P.A.
Lay Out the Duties for the Role Clearly
The job description in your employee contract should lay out every responsibility that will be under that employee’s umbrella. No one enjoys having extra work piled onto them, or being forced to go beyond the tasks that they were hired for.
Make the language of an employee’s tasks clear, so they understand exactly what is expected of them. Avoid being unclear or using intentional vagary in order to siphon extra work out of employees that may not fall under their job description.
For example, if an employee may be required to work extra hours, then the amount of expected weekly overtime should be clearly defined. Being unclear or deceptive with the responsibilities of a job role will only drive away talent. Transparency should be a part of every employment contract.
Boye Fajinmi, TheFutureParty
Specify the Period of Employment and Work Hours
Specify the period of employment and the work hours required. Will this be a temporary job or a permanent position? How many weekly hours should the employee be working? Are they flexible hours or fixed? Be as specific as possible about these things to avoid any confusion from your employees down the line.
Drew Sherman, RPM
Keep Contracts Current
It’s important that companies review their employment contracts at a regular cadence, whether it’s semi-annually or annually. It can be often contingent upon the evolution of organizational and labor guidelines that impact the employment arrangement. This review should be authorized by a General Counsel, a legal source, which is seasoned in employment law at a bare ‘minimum’.
Laws and regulations are constantly changing that employers need to protect themselves while ensuring the hired candidates are also aware of any recent changes in the workplace.
Whether these changes are dictated by the economy, government statutes and/or organizational leadership, it’s important these updates are communicated to existing and new employees. Also when custom employment arrangements are formed, it’s crucial that all parties entering the agreement know what custom additions/omissions are made prior to signing. Employers need to understand what they are offering so they’re not blind sided if sued.
Sasha Laghonh, Sasha Talks
Clearly Outline Any Opportunities for Monetary Benefits
Clearly outline any opportunities for bonuses, raises, or other incentives. It can be tricky in many contracts as some companies operate these monetary benefits on the fiscal year. This should be visible for the employee to find and understand in the contract. It avoids any confusion moving forward and ensures everyone is aligned from the first day.
Jodi Neuhauser, Ovaterra
Have Clear Termination Details
The best practice for an employment contract is to have clear termination details. It should include a clear statement of both the employee and the employer’s obligations, as well as what will happen if either party fails to uphold their end of the bargain.
The termination section must be clear and straightforward. It should say exactly what happens if either party terminates their relationship, whether it be mutual agreement or otherwise.
In addition, there should also be language stating what happens if either party fails to fulfill their responsibilities under the contract. This could include penalties such as fines or possible legal action if the other party is found to have breached their end of the contract and caused harm to the other party in any way.
Tiffany Homan, Texas Divorce Laws
Include All Detailed Information for Mutual Accountability
An employment contract should be designed to ensure both the employee and employer are protected. Best practices are to include detailed information such as start date, salary, benefits, working hours, and company policies. It should also include a mutual agreement about the termination of the contract if necessary. Your written contract will be a reference, defining what is expected of both employee and employer, so that they can mutually hold each other accountable for meeting those expectations and prevent conflict down the road.
Adam Bem, Victoria VR
Define Your Working Model and Expectations Clearly
With scheduling flexibility becoming more and more relevant in the office, it’s crucial to clearly define your company’s working model and the expectations that accompany it. If you offer remote work options, clarify whether the employee can set their own hours, or if you require them to be available and online during specific days and hours. And if you are utilizing a hybrid work model, always define if there are mandatory in-office days, or if there is more flexibility when it comes to setting a mixed schedule.
Victor Mathieux, Miracle Brand
Get the Contract and All Details to the Employee in a Timely Manner
At my company, we send out employment contracts electronically so the employee is able to receive them in a timely manner and sign their employment contract even if they are out of town, etc. We also include a letter that has their total employee compensation package so the employee is able to see how much of their benefits is paid by the company (insurance, retirement, etc) on top of what their annual salary is.
Lindsey Hight, Sporting Smiles
Use Straightforward Contract Language
Simple and straightforward language in a Contract is one best practice when it comes to an employment contract. An ideal contract should not have any confusing legal clauses. Complicated and confusing clauses will leave space for different legal interpretations when the contract ends in front of a judge. Basically, the language used in the employment contract document should be easily understandable by the employee without the help of a lawyer or any law professionals. It brings the clarity and responsibility of the contracted term to both sides.
Karen Cate Agustin, Investors Club
