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An employment contract is more detailed than an agreement

On Behalf of | Dec 29, 2020 | Business & Commercial Law

When you begin hiring employees for your new company, you want to cover all the information they need while protecting your business.

As opposed to a basic employment agreement or memo of understanding, an employment contract sets forth detailed information concerning the position your new hire is going to fill.

Position description

Describe the position so that the new employee clearly understands the requirements and duties of the job. Be sure to include the title of the position, the location of the job and the hours of employment.

Compensation details

Insert the figure you and the new hire have agreed on as compensation and whether the method of payment will be hourly, salaried or commission. Describe the overtime policy as well as the percentage that relates to a commission payment, if applicable. Also, describe the incentive program if your company offers it and provide an explanation of expense accounts.

Performance expectations

Describe the skills the new hire will utilize in this position and any milestones you expect him or her to reach. If the position is for a salesperson, include commission information regarding percentages and management of draws against commissions.

Company benefits

New employees are usually just as interested in the company benefits package as they are in the rate of compensation. The employment contract should include a description of the health, vision and dental plans you offer plus details concerning holidays, vacations, profit sharing, retirement plans and any other benefit your new hire can expect to receive.

Agreement length

Define an original term of employment plus options for extending, reducing or terminating the contract. You must cover termination information and the severance terms that might apply. Keep in mind that throughout the document you must use clear, concise language, leaving no room for misinterpretation of any section in the employment contract.