Employment Contract

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What is it?

An Employment Contract is a contract of employment for an employee of your business. It sets out clear expectations for both you and your employee and lays the foundation for a mutually rewarding relationship.

An Employment Contract is a document designed to regulate the relationship between an employer and an employee. It lays out key information about the employee's work, including important areas such as such as pay, benefits, hours, holiday, sickness, termination, and confidentiality. It gives the employee and employer contractual responsibilities and allows either side to take legal action if the other side breaches the contract.

Why do you need it?

Most businesses employ staff at some stage. If your business employs people, or if you're thinking about employing people, you should ensure that you protect your business by setting out exactly what you expect from your employee and how your relationship might come to an end.

Some matters to include in an Employment Contract seem fairly straightforward, such as the hours an employee will work, holiday entitlement, and pay. But will they receive overtime pay or a bonus? Do you want there to be a period of probation during which you can monitor the new employee's performance, and, if necessary, dismiss them from the role? How can the relationship come to an end? How much notice does the employee have to give to terminate their employment?

A well-drafted Employment Contract is consistent with the current law and lets both sides know exactly where they stand. Your employee knows what to expect and you are protected in case the relationship doesn't work out.

Key clauses to watch for:

When drafting an Employment Contract, it is important to focus on a number of key clauses, in particular:

  • Period of probation (if any) and notice to be given during probation;
  • Benefits the employee will receive;
  • How much notice must be given to terminate the agreement; and
  • How confidential information should be protected.

For senior employees, it's also worth including the following:

  • Waiver of intellectual property rights;
  • Whether they can follow outside business interests; and
  • What restrictions you will impose post-termination.

Employment Contract Document