The Importance of Employment Contracts

Business man and woman signing papers.

What do you think is the most important thing that an employer can do to protect themselves, no matter the size of their business or their industry?

Having an employment contract that has been reviewed by an employment lawyer and that clearly defines the nature of the employment relationship is so very valuable to all parties involved. There have been so many instances where our clients have had to deal with very challenging terminations that could have been mitigated by having a proper employment contract in place. 

In today’s “new normal”, with many nontraditional types of employment emerging, the expectations and requirements of both workers and employers need to be clearly and appropriately defined so all parties are aware of their rights and responsibilities. Freelancers, contractors, gig workers, 9 to 5’ers … everyone should have a clear picture, especially when a dispute or other issue arises.

Employment contracts can help clarify the following:

  • Expectations of both the employer and employee
  • Confidentiality and non-disclosure agreements, as well as the handling of sensitive material
  • Compensation, including rate of pay, overtime pay, benefits and bonuses
  • Expectations for work hours, breaks, sick leave, vacation time 
  • Conflict resolution options, including complaints about harassment or discrimination 
  • What happens if there is a breakdown in the working relationship
  • Notice in the event of termination – both on the part of the employer and employee. 

A clear outline of these important aspects of the working relationship will serve to protect all parties involved. Employment contracts are well complimented by company policies outlined in an accompanying handbook or memorandum. Unionized workplaces and employees would be protected by a collective agreement instead of individual contracts but the same criteria would generally apply. 

While a solid employment contract will not eliminate any risk or liability, it can significantly reduce the possibility of conflict and misunderstanding. Stay tuned for our next blog when we discuss what can happen when there is no employment contract in effect. 

True North HR Consulting is here to help with complete HR services customized to your needs. From small businesses to large organizations, our goal is to assist, advise and implement strategies and policies to make your business thrive and keep your people happy. With over 20  years of experience and expertise, we can help you generate new ideas and solve big problems. Reach out today and let’s get started … [email protected]