Being a smaller recruiting firm means you likely don’t have access to a dedicated legal team, which assists with contracts and agreements. This can put you in a tough situation if you are rapidly growing and need a new one on the fly. Agreement requirements can be controlled by several things such as: State Law, Employment Type, Role or other employer related needs.
Below we are going to cover important points to consider when building a contract for an employee.
Job Details, Responsibilities & Objectives
It’s important to make sure you’re laying out a clear and defined understanding of the job’s responsibilities and duties the employee will be responsible for. Make sure the scope of work is clearly defined so there are no misunderstandings of each parties’ responsibilities.
Consider how a performance evaluation will be performed. Who they will be reporting to, how quickly tasks should have been completed and what objectives should be achieved.
Here are some items to make sure are included:
- Job Title
- Job Description & Responsibilities
- Scope of Work
- Objectives & Tasks
- Who does the employee report to?
- Skill & Experience Requirements
Take the time to ensure that the layout is clear and concise plus the role is defined appropriately for your business or your clients.
Compensation & Benefits
While most candidate will want to know the compensation and benefits upfront during the interview process, it’s important to make sure all details are included in the contract. compensation packages are a crucial factor in a candidate’s decision to accept a role.
Here’s what to include in this portion of the contract:
- Salary or Hourly Pay Rate (regular and overtime)
- Pay Frequency and Payday
- Bonus & Commission Structure. How to achieve it.
- Per Diems, Reimbursements, Expenses
- Raise & Incentive Opportunities
- Health benefits (medical, dental, vision, disability.)
- Retirement Plans (401k Plan/Other Investment Plans)
- Signing Bonuses
Employment Classification
Making sure there’s a clear understanding what type of employment the worker is contracted under may seem like a simple thought, but improper classification can come with serious repercussions. Ensuring the contract states this transparently, whether they are classified as an employee or a contractor (1099) to ensure tax and insurance compliance laws.
Additionally making sure they are aware if this is a full-time or part-time job will provide clarity of their expected schedule plus set expectations for benefits eligibility and tax filing.
Assignment Timeline & Schedule
Ensure that the employment contract explicitly specifies whether the position is full-time or part-time, as well as whether it is ongoing or for a fixed term after the initial start date. While some job opportunities are available on an as-needed basis, job seekers seeking job stability, or a traditional role should be informed early of any predefined expiration date for their position.
When outlining the schedule, clearly state the expected working hours for the employee. If your business has set working hours, use those to define the role further. Additionally, specify any flexible working options (such as remote work or working from home) that may be available.
If there are exceptions to the standard working hours (e.g., nights or weekends), clearly define and explain them. Consider compensation rules related to these exceptions, such as shift differentials or holiday pay.
Remember that some roles may hire both full-time and part-time employees. Keep your full-time and part-time contracts separate for clarity. Having templates created in your e-signature platform will allow you to easily manage and send these different contracts.
Additional Items to Consider:
- Office Hours: What are the working hours?
- Remote Work: Is remote work an option for this position?
- Weekly Workload: How many hours per week are expected?
- Work Schedule: Is the schedule fixed or flexible?
- Position Type: Is it part-time, full-time, or an internship?
- Employment Term: Is it fixed-term, permanent, or at-will?
- Work Hours: Do employees work during holidays, weekends, evenings, or nights
Time Off & Sick Leave Policy
The accumulation and utilization of time off is a critical component of employee compensation and benefits, warranting its own dedicated section in your employment agreement. The policy should clearly delineate the method of accruing time off, the conditions under which it can be used, and the procedure employees must follow to access these benefits. Typically, organizations provide compensatory time off, such as sick leave and vacation time, which may accumulate over time or be granted periodically. It is essential for the contract to articulate these accrual methods to ensure employees are well-informed about their entitlements.
Regarding paid vacation, the contract should specify the availability, the process for approval, and the method for submitting requests. Should the number of vacation days increase with tenure, the contract must detail the accrual rate and any maximum limits. For businesses with specific busy periods, blackout dates may be necessary, and employees should be made aware of these times and the associated limitations.
Additionally, the contract might need restrictive clauses if these periods are fixed and unlikely to change. Different expectations apply to sick days, family emergencies, and unpaid leave, and any related policies or restrictions should be explicitly stated in the employment agreement. Opportunities for employees to work additional hours, such as after-hours or on weekends, to compensate for absences, should also be noted, providing a way to balance unforeseen time off.
Confidentiality Clause
Every enterprise possesses sensitive information, such as proprietary methods or confidential data, which necessitates safeguarding. Incorporating clauses for confidentiality and non-compete into your employment contracts can effectively communicate these expectations to new team members. Rather than handling these as standalone agreements, it’s more efficient to integrate them within the employment contract itself, complete with a provision for digital acknowledgment by the employee. Vigilance in protecting business secrets is crucial; without formal documentation, enforcement becomes challenging.
Ensure your contract addresses the following critical points:
- Does the employee have an obligation to a non-disclosure or confidentiality agreement?
- What information can the employee disclose outside the company?
- Who retains the rights to intellectual property developed by the employee?
What’s the difference between a non-disclosure agreement (NDA) and confidentiality agreement?
A non-disclosure agreement (NDA) and a confidentiality agreement are both legal contracts that aim to protect sensitive information from being disclosed to unauthorized parties. However, there are subtle differences between the two. An NDA is typically used in situations where only one party is sharing confidential information with another, establishing a confidential relationship that obligates the receiving party to keep the information secret. On the other hand, a confidentiality agreement is often used when multiple parties are exchanging information and agree to keep the shared information private. This type of agreement is common in employment contracts where both the employer and employee may share sensitive information. In essence, while both agreements serve to protect confidential information, the context in which they are used and the flow of information they govern can differ.
USA Staffing Services handles all employment paperwork and contracts in addition to back-office support.
We provide the proper paperwork and send on your behalf to take the workflow off your plate. Don’t worry about legal requirements or keeping up with rules and regulations. Let our team handle it for you! Contact Us today.