Employment Contracts – Houston Law Firm
When a person wants to be employed to perform certain tasks in a company or business, they usually enter into a contract with the employer. This contract is known as an employment contract. An employment contract is a legal document put in writing that outlays the binding terms and conditions that will govern the relationship between the employer and employee. RunRex highlights what an employment contract entails.
While the employer and the employee can actually negotiate the terms and conditions included in the contract, the employer is the one who has the power to decide the type of contract to offer the employee. The type of contract offered depends on a number of factors like the nature of the business and the main tasks handled. The main types of employment contracts include:
• Probation contracts
• Fixed term contracts
• Casual contracts
• Open-ended contracts
• Contracts to perform specific work; and
• Foreign contracts
Probation contracts
These contacts can be terminated at any time by the employer without them giving any reason for the termination. Such come in handy when an employer wants to find a quick exit from a contract. Such contracts should last for a maximum of twelve months. They usually starts with the initial period of 6 months after which the employer will decide on whether to extend the contract or not.
Fixed contracts
These are contracts that last for a specified period. It is one of the most favored contracts since it works well for project-based work. The employer only has to pay for the work done. Also, the employer can decide to wait out the contract if the employee’s work is not satisfactory and fail to extend the contract upon completion of the initial period. This contract expires when the initial period specified in the contract ends.
Open-ended contracts
Commonly referred to as contracts on permanent and pensionable terms, open-ended contracts offer greater job security. However, just like the fixed contract, the open-ended contact can be terminated by either the employer or the employee.
Main elements of an employment contract
Position of employment
The employment contract should state categorically to the prospective employee the job requirements. These include the name of the position the employee is going to assume and the main duties that they will be in charge of performing. It should also indicate the place of work and the hours during which the employee is supposed to dedicate to their tasks in the job.
Length of the agreement
The length of the contract will depend on the type of contract being signed. It is important that when preparing a contract, its elements be favorable to both the employer and the employee. They have to agree on the length of the contract, the rules to be followed and conditions that will govern the extension, reduction or termination of the contract.
Performance requirements
For the performance requirements to be included in the contract, the employer can establish the skills they would want to be upgraded upon the expiry of the contract. It should also specify the product goals that are being targeted and the enhancements in revenue needed. Depending on what the role of the employee will have in the business, the employer can incorporate other performance barometers to use in ensuring that the employee is accountable and delivering as expected.
Compensation
Since the employer will be employing the skills of the employee and, in turn, the employee will invest their time and manpower in the business, the employee has to be compensated for their investment. Negotiate the salary and write the figures in the contract. Also, if the company has any incentive programs, they should be stated in the contract, its terms and its objectives too. Also, information on how expense accounts are handled should be included.
Benefits
If your company has any benefit packages for its employees, have these benefits clearly spelled out in the contract. Some of the common benefits include dental, vision, health and other insurances. Also, be sure to include information about other items like stock options, vacations and holidays, profit sharing and any retirement plans the company follows if there are any.
Other elements
Covenants can include a non-recruit agreement, non-disclosure language, non-solicitation period and non-compete clause if they are applicable. As such, it is best to employ the services of your company attorney for guidance. The employment contract may also include a clause on property rights covering the ownership of equipment, existing clients, patents, copyrights and licenses that are being held by the company.
Termination
In as much as it might seem unpleasant to terminate an employment contract, some circumstances are unavoidable and may require a contract to be terminated. Clearly, state the language to be followed when terminating employment especially for circumstances that may not be because of the employee violating the terms of the contract.
While there might be other details added to the contract depending on the company and the job description for the employee, these are the main components found in a contract.