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3 essential elements of an employment contract

On Behalf of | May 4, 2022 | Business Law |

Hiring a new employee usually marks another important step forward for your business. But just like with any employment relationship, you must make sure your employee understands what you expect of them as the employer.

One way to do this is by requiring your new employee to sign an employment contract. According to Indeed, employment contracts are often used to protect both the employer and the employee by establishing the terms of the new working relationship, and they should include specific elements.

1. Compensation agreement

The compensation section of your employment agreement should state how much you will pay your new employee. This section can also include information about stock options, raises and bonuses.

2. The terms of employment

You may want your employment contract to remain viable as long as your new employee can stay at their job. However, if a set term for the employment agreement exists, you will want to include this in your contract.

3. Employee benefits

In the employee benefits section of your contract, you should clearly outline what benefits you will provide your new employee. For example, you may want to include information about disability coverage, health insurance and life insurance.

Including information about employment terms, compensation and employee benefits are just a few key pieces of information to include in your employment contract. Depending on the scope of employment and the particular job, you may want to include other details for your employee to agree to in the contract.


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