What is a contract for employment?
Learn more about an employment contract and how to create your own in order to keep your business moving.
If you’re a business owner, there may come a time when you need to hire an employee to assist with some of the workload. In this case, creating a contract for employment can help ensure that everyone’s roles and responsibilities are clear.
Employment contract definition.
An employment contract is a legally binding agreement between an employer and employee used to define the working relationship. You can use one to outline the employee’s role and responsibilities within the business as well as to outline their compensation and any benefits they might receive.
While an employment contract can technically be as simple as a handshake agreement, it is more common (and advisable) to create a written contract that you and your employee will both sign.
What specifics does a contract for employment typically include?
While there is no set standard for employment contracts, there are common items you should include in order for you and your employee to be clear on expectations.
Here’s what you should include when writing a contract agreement:
- Job responsibilities: A general outline of tasks and duties.
- Duration of employment: Such as seasonal, defined (for example, two years), or indefinite.
- Schedule: Expectation of hours/days employee will work.
- Compensation: Itemization of salary, wage, or commission initially agreed on.
- Benefits: Any additional benefits that are being offered, such as health insurance, retirement benefits, employee discounts, and so on.
Depending on your type of business, you may also choose to include within the contract a confidentiality agreement and/or a non-compete clause (NCC). Alternatively, these can be written and signed as separate documents.
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