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What is an Employee Contract?
An employee contract is a written agreement between a hired employee and a company or any labor organization. It states the obligations of both parties within the designation of the employment. It also states the rights and all the subjections of the worker and the employer. Also known as workers agreement or employee agreement, it is necessary in companies in all kinds of industries. The contract makes the employee to understand the company’s standards and all the things that they have to meet. It assures the employer to have no fear of employment accountability risks. There are free employment contracts that can be downloaded through the internet for you to understand more about it. If you have a business, there is an employment contract template or an employee contract template that you can use. Usually an employment contract is a written document, but sometimes it is verbal. The conditions of the employee contract includes the following:
- It is clear about the salary, wages or commission.
- It states the schedule of work or on what hours will the employee would work.
- It declares the length of the employment or the span of time that the worker will give service to the company. If the position is permanent, then the duration is ongoing. But if it is a contract position, then it would tell how long the worker can stay in the company. It may also be probationary or can be extended.
- It lists the general responsibilities or all the duties of the worker that they have to fulfill at work.
- It states confidentiality. Some contracts has a non-disclosure agreement.
- It lists all the benefits that a worker can get from the company. Some of these are 401k, health benefits and insurance, vacation leaves, and other perks that a worker can enjoy while in the company.
- It states how the employee and the worker will communicate to each other. And that the company has the right to control communication.
- It has a non-compete agreement. It declares that the employee cannot enter into another company that has competition with that company after the termination of the employment.
The Benefits of an Employment Contract
An employment contract is proven to have benefits. It is the reason why it is continuously used in all kinds of businesses. You may want to know them.
Steps in Writing an Employment Contract
An employee contract must be well-constructed. You can take the following steps to be able to construct an employment contract.
Step 1 Make a good title for the employment contract.
Give it a title. You can name it “Employment Agreement” or “Employment Contract”. Put something that the one who will sign it will easily recognize what it is. It will be written at the top of the document.
Step 2 State the parties involved in the agreement.
Tell who are the parties that are going to enter into the contract. Clearly write the name of your business and the name of the employee that you are going to hire.
Step 3 Declare the terms of the employment and all the conditions.
All of the terms and stipulations should be according to the laws of the government. It involves the conditions of working hours and compensation packages. The conditions may differ by jurisdiction. Check your local laws about employment.
Step 4 Be clear about the duties of the job.
Give the new hire an outline about their tasks. Be distinct about the things that are expected from them. You can divide the tasks in percentages.
Step 5 State the elements of the compensation.
State clearly the details of the compensation so that there will be no dispute about the paycheck. You must tell how the worker will get his salary, how they will be paid with overtime, what holidays they are going to be paid and not, how much the salary will be, and the yearly bonuses if there are any.
Step 6 After being clear with the terms, consult a lawyer.
Declare the specific terms like effectivity date, kind of employment, date of termination, process of dispute, and applicable laws. Then have an attorney to review the document if it follows all the rules and laws of the government. By having a lawyer, you can protect your business.
What are the Kinds of Employees That Can Sign an Employment Contract?
There are different kinds of employment. A new hire can be assigned with the following kinds of employment.
An employee can be hired full-time which means they will work for full-time hours (commonly 8 hours a day or 40 hours a week). They will be a permanent employee without no termination end date. This is the usual employment we can get when we are hired by a company. It is a good chance of employment. It is a stable kind of employment.
Part-timers are those who cannot allot full-time hours within the day. They can work less than 40 hours per week (usually 20-30 hours per week). Their employment can also be permanent and without termination end date. Part-time jobs are a good opportunity for working moms and for people who has other obligations.
These are also called independent contractors. They are also considered employees throughout the time of the employment. They work on fixed projects that will be done on an agreed specific time. This is an opportunity to people that do not want to commit completely to companies or cannot work full-time or part-time. Their time will be flexible.
Do Employee Contract Have to Be Renewed Every Year?
No, there is no need for renewal each year. It is valid for the whole period that is stated in the contract. In case of promotion, you will need to sign an updated contract.
What if the Employee Do Not Want to Sign the Employment Contract?
The position that they are hired for may be forfeited if they will not sign an employment contract. They may not be able to work for the company. There are cases where negotiation may be made so that the employee will agree after revising the contract.
How a Job Offer Letter Differs From Employment Contract?
The job offer letter is unofficial. It is just the first statement of the basic employment. It is not legal. On the other hand, the employment contract is legally binding.
It is necessary to keep our integrity after signing the employment contract. Let us make sure that we will follow all the things that we have signed. That was why it is important that we read the employment contract first before signing. Sign only contracts that you think will benefit you and those that can make you keep your word.