Employment Contracts - Employment Contracts & Contract Form Info

Employment Contracts

Employment contracts, historically differentiated from "contract of services", are legal instruments defining the responsibilities as well as obligations between parties involved in a negotiation. The parties mentioned in employment contracts are the "employees" and the "employers" and, the employment contracts exist to ensure that there is a balance to the inequality of bargaining power that is inherent in employment relationship. Thus, employment contracts denote the relationship of natural imbalance manifested in social insubordination and economic dependence.

What are the terms and conditions included in employment contracts?

The main concern focused in the negotiations of employment contracts is the monetary value, or salary or wages or commission in exchange for the job done for the employer and as indicated in the employee's job description. The employment contracts should include essential terms for notice periods in cases of dismissals or rights on holiday pays or clarifying the place of work and pension schemes. Aside from monetary compensations, employment contracts also provide for fringe benefits such as medical leaves (maternity/paternity), health insurance, holiday, retirement plan and other benefits deemed applicable. Equally, employment contracts indicate obligations such as duration of worker-employee relationship, mechanisms to resolve disputes and ownership of intellectual property. Clauses on post-employment confidentiality, termination, non-solicitation and non-compete and enshrined in provisions of employment contracts.

How are employment contracts designed?

For owners of business planning to use employment contracts in their commercial endeavor should look into the following:

1. Employment contracts unilaterally imposed expose notable risks when brought to court if the employee has entered into the agreement under duress;
2. Employment contracts can be effective tools to mitigate potential business risks from damage of ex-employees;
3. Comprehensive employment contracts can be collaboratively designed with the employee. A well thought of duties and responsibilities by both the employer and employee can be a desirable tool to avoid litigation;
4. Most experts' advice the crafting of termination of contracts indicated in employment of contracts as "at will" rather than "for cause" avoiding legal entanglements that might arise when the agreement is perceived as a permanent job;
5. Review relevant laws before entering into employment contracts;
6. Enter into employment contracts only for defining legitimate business relations;
7. Managers and executives have different contributions to the company, thus unique employment contracts are necessary for each as they are not "one-size-fit-all";
8. Employment contracts need to review suitability of severance arrangements from time to time and legally safe if severance programs will further indicate severance plans;
9. There is also a need to determine the type of mechanisms for dispute resolution in employment contracts.