What Is an Employee Agreement?

An employee agreement is the traditional document used in relationships between employees and employers for the purpose of laying out the rights, responsibilities, and obligations of both parties during the employment period. Given its purpose, an employee agreement can be one of those vital documents utilized by an employer. The employee agreement will allow an employer to solidify the relationship with employees to make certain that the key terms of the contractual relationship are understood by each party. Examples of these key terms are:
• Salary
• Benefits
• Work schedule
• Vacation allotment
• Restriction on confidential information

Advantages of an Employment Contract

While most employment in the U.S. is at-will, employers may utilize employment contracts as a way to ensure that their most qualified talent is bound by the terms of a contract, which will be a deterrent to employees leaving the company and an advantage to the contract.

Employment contracts can also incentivize highly skilled employees to join your company. The prospect of having a contract can ensure greater stability for the highly skilled employee. These employees may have other job offers, and a contract with appealing turns could lure top talent to your company. Lastly, the presence of an employment agreement will provide the employer with greater control over the work being done by the employee subjected to the contract provisions.

Disadvantages of an Employment Contract

Unlike an at-will employment relationship, the presence of a contract will preclude an employer from simply terminating an employee if the employer experiences a downturn in business or the employee does not meet the employer’s original expectations. Unfortunately, in either of these cases, the employer will be left to likely renegotiate the employment contract with the employee.

Under the legal provisions of the contract, an employer is obligated to act under a covenant of good faith and deal fairly with the employees as they enforce the original terms and conditions of the contract. This provision is an important protection for employees as it serves as a deterrent to prevent an employer from breaching the contract as acting in bad faith could ultimately lead to more extensive legal damages under the law.

What to Include in Your Employment Contract Template?

Employers must take great care to ensure that the necessary information about the company and the prospective employee are contained in the employment contract. Such information like the name and address of the company as well as the name and address of the prospective hire are basic and should be found in the template. Clearly, an employer would want to ensure that the cash compensation to be provided to the employee has been reduced to writing.

Traditionally, employees receive compensation for their work in the form of a salary payment or commission amount based on pre-defined metrics. Employers are also free to combine the compensation types by offering an employee both a salary and the ability to additionally earn commissions.

Another item that may be included in the employment contract template is the standard confidentiality provisions that aim to protect the company’s intellectual property. Some employers will choose to do this in the form of a Non-Disclosure Agreement, but it is also as effective in the employment contract template. Either way you choose, an employer must be specific about the information that must remain confidential. In terms of social media account access, if your prospective employee with be responsible for maintaining your online social media presence, you should probably formalize the fact that the company retains ownership of any of the employee’s activities on these respective media forums.

While most employers will try to determine during the interview process whether an employee will work diligently upon employment, some employers will attempt to formalize such an expectation in the form of a best-efforts clause embedded within the employment contract. Quite simply, a best-efforts clause states that the employee will work to his/her best potential ability and will remain loyal to their employer throughout the course of employment. In addition, a best-efforts clause often will require the employee to agree to bring forth suggestions for improvement that could benefit the operations at the company.