Employment contracts, similar to consulting contracts, set forth the terms of the relationship between employer and employee. These contracts aren’t always common but there are some situations where they should be used. These contracts should address many aspects such as:

• The job description
• Salary/Compensation
• Duration of the job
• Information about the employee’s responsibilities
• Benefits they will receive
• Grounds for termination
• Limitations on the employee’s ability to compete with the business once they leave
• Protection of trade secrets and client lists
• Ownership of the employee’s work product
• A method for resolving any disputes that come from the agreement

Advantages of Using Contracts

Written contracts are beneficial when controlling the employee’s ability to leave the business. If finding and training a replacement would be costly and time-consuming, then a contract could help prevent needing to find one or give the employer enough time to do so. Written employment contracts can lock the employee into a specific time frame and require they give enough notice to the employer to find a suitable replacement.

They also help protect confidential or sensitive information. These contracts can include confidentiality clauses to prevent employees from disclosing information.

If an employer is competing against other companies trying to employ a highly skilled candidate, a contract can help. The contract can be written to entice them to join that company rather than others based on the terms included.

Disadvantages of Using Contracts

Because contracts are a two-way street, it can also limit the employer’s flexibility. If they decide they want to change the terms of the contract, the employee might not agree. This can put the employer in a difficult situation.

Business needs frequently change and if an employee is no longer needed, but is contracted for two years, terminating them earlier would be a breach of contract. Renegotiating is possible, but again, the employee must consent and the process can be time-consuming.

InnovaCounsel attorneys can assist companies when creating employment contracts and deciding if they are appropriate for the situation. Contact InnovaCounsel to see how their in-house services could benefit the company, whether it’s on a part-time or full-time basis.