Things to include in an employment contract

On Behalf of | Jun 20, 2018 | Business Law |

Your business is growing. Business has been so good, in fact, that your mom and pop operation now needs more employees. Before you can place a help wanted ad online, you may want to consider drawing up an employment contract for your potential new employee. The problem is, you have never created an employment contract, and you have no idea where to start.

Before creating an employment contract on your own, you might want to consult with an attorney that specializes in employment law. Employment law is a very dynamic area and changes occur very rapidly. The drafting of these contracts can be extremely difficult, and it’s not recommended anyone undertake this without consultation with a lawyer. The failure to consider state and federal laws could cause some, and possibly all, of those terms to be rendered unenforceable.

Type of employment

First, decide what kind of employee you are hiring. Are you looking for someone who will be full-time, part-time or work on a contractor basis? Figuring out what kind of employee you need will help you decide on hours, compensation, and if he or she will be eligible for benefits. Make sure you clearly outline what kind of type of position in the contract. Some people will not want to work as contractors, so clearly stating this will ensure you are getting the right employee.

Employment hours and schedule

If you are hiring a contractor, you may want him or her for a set time period or an at-will basis. If there is a set amount of time, state the length of time in the contract. For a part-time employee, you may want to guarantee a certain number of hours. Or you could decide not to make any such guarantees. Regardless of the type of employee, you will want to communicate the schedule he or she is expected to work, and if the employee is expected to work onsite or remotely. Maybe you plan to let employees work from home two days a week. You should include that information in the contract.

Job role

Clearly define the employee’s job role. Create a job title and decide what department the employee will work in. If your company is small, there may not be separate departments, but you at least want the employee to know who he or she reports to.

Pay and benefits

Communicate the employee’s compensation, whether it is an annual salary, an hourly rate or payment is a project-based. If there is potential for bonuses or other sales incentives, include this information as well. If your company offers benefits, your employment contract should state the type of benefits offered, as well as cost to the employee. Any retirement savings information should also be outlined.

PTO and vacation

Some companies offer paid time off (PTO), and some companies offer PTO and vacation. Other companies include sick time. Decide what your policy is and then clearly outline it. Be sure to include information about whether this time will be available immediately or on an accrual basis.

Internet usage policy

Since many jobs involve the use of a computer, you should address whether employees can use the internet to check email or social media. Even if an employee does not use a computer for work, you will likely want to address what employees can or cannot say about the company online.


Define how termination will occur and any possible behaviors that could initiate an employee’s termination. You will also want to include information about length of notice for termination. If you do not want your former employee to go work for the competition, you might want include language about that in the termination policy. However, you need to be careful how you word non-compete policies. Some non-compete policies do not stand up in a court of law. You may consider contacting an attorney to review any non-compete policy language. An attorney can advise you how to create a legal document that protect your company’s best interests.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Sheehan, Barnett, Dean, Pennington, Dexter & Tucker, P.S.C. or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.