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Employment contracts: Important terms to include

An employment contract serves as a roadmap, outlining the rights and obligations of each party. It minimizes ambiguities and sets the stage for a harmonious work environment.

While every employment contract is different and should be tailored to the unique aspects of the role and organization, specific points should be consistently covered to protect both parties.

Job description and scope of duties

A thorough job description, including duties, work hours and location, is the foundation of an employment contract. This provides a baseline for performance reviews and clarifies what is expected from the employee, reducing the risk of disputes.

Compensation and benefits

It must outline compensation packages, including salary, bonuses, and any other forms of remuneration. The contract should also state benefits such as healthcare, retirement contributions and allowances or reimbursements.

Terms of employment

Whether the employment is at-will or for a fixed term should be stated explicitly. For fixed-term contracts, the start and end dates must be included. Procedures for renewal or termination of the contract should also be noted.

Confidentiality and non-compete clauses

Many employers include clauses that protect the company’s confidential information. Non-compete clauses may also be included, but these must include a specific time frame after leaving the company.

Performance reviews and grounds for termination

The contract should outline the specifications for performance evaluations, including how often they’ll occur and what metrics will be used. Additionally, clearly defined grounds for termination help both parties understand what actions could end the employment relationship.

Dispute resolution

A clause outlining how disputes will be resolved can save both parties time and legal fees. This often involves mediation or arbitration as a first step before taking issues to court.

Ultimately, both parties should understand the contract before signing. Having someone look it over might be a valuable step.