If you own or run a small business, at some point you’ll likely need to contract with one or more key employees, whose employment you want to secure for an extended period. These may be specialized operators who are being brought in for specific, extended projects; or they could be more generalized practitioners who have been in your business for a while already, know the ropes, and need to be kept around to train and manage newer people.
Whatever the case, creating a suitable employment contract that meets the needs of both company and employee can be complicated. Given that this will be a detailed document which, for any of a number of reasons, may ultimately have legal implications for you and your firm, it’s highly recommended that you hire an attorney to at least review any documents before signing. This is absolutely not something that you should try to do alone, without the input of qualified experts.
However, as you begin to think about creating an agreeably employment contract, there are a number of items to consider. When opening discussions with your potential employee, you’ll want to go in with a wish list. Don’t rely on your memory. Make sure that all of the following items are addressed in your discussions, and ultimately in the contract that you both sign.
- Expectations for both parties. While this includes employee compensation level and structure, it goes much further. You need to outline opportunities for advancement, and expectations in both directions – expectations the employee has for the company or management, and those that management has for the employee. Adhering to safety guidelines, set hours for work, regular drug tests, or prohibitions on employees working for competing companies are all items to address.
- Respective obligations and duties. Again, a good employment contract will be a two-way street between employee and management. The employee should know what the company will do for them, and they for the company. Will they have quotas that they’re expected to meet, or be obligated to periodically work overtime as needed? Will the company be supplying them with lists of sales leads, or any equipment that is to be in working order, and maintained by the company?
- Protection for both parties. Even though both parties may understand implicitly that the company shouldn’t be held liable for actions of the employee – or vice versa – remember that this document may be needed to distinguish between employee and company for liabilities from a third-party. If the employee is indemnifying the company against any liabilities that incur as a result of their own negligence, that needs to be spelled out. The company may be extending liability coverage to protect the employee against any claims that result from the employee’s properly-conducted daily activities; liability related to the company’s products, for instance. For everyone’s benefit, make sure that any such protections or indemnifications or stated in the contract.
- A process for conflict resolution. You, your managers, and your employees should all have an explicit understanding of how issues will be resolved – or attempt to be resolved – within the company. Will you use mediation to settle disputes amongst employees or between employees and management? Is there a panel or board within the company, comprised of employees and managers, that will hear respect viewpoints and settle disputes? If an employee has a problem with their supervisor, to whom should they turn?
- Clear chain of authority. In your employment contract, you need to identify your employee’s direct supervisor, and the chain leading to the top. This should be used to spell out the employee’s process for registering any complaints, get clarification on any issues or problems, or raise questions. This is especially important for any potential safety concerns, but also establishes guidelines for quality control and periodic employee reviews.
Drafting a comprehensive employee contract that works for both company and employee is complicated and time-intensive. There are a lot of issues that need to be spelled out, and any number of potential circumstances that might arise in the future, which need to be addressed as contingencies. These are among the reasons why we strongly recommend working with an attorney to draft such a document for your business. However, whether you’re working with an expert already, or just beginning to think about what you’d like to include in your employment documents, make sure that the issues above are among those addressed. Spelling out these items explicitly will serve both your company and your employee well, and start your relationship out on solid, well-defined footing.