Employment contract
An employment contract or contract of employment is a kind of contract used in labour law to attribute rights and responsibilities between parties to a bargain. The contract is between an "employee" and an "employer". It has arisen out of the old master-servant law, used before the 20th century. Employment contracts relies on the concept of authority, in which the employee agrees to accept the authority of the employer and in exchange, the employer agrees to pay the employee a stated wage (Simon, 1951).
Employee vs. Independent Contractor[edit]
An independent contractor is in business for him or herself providing services to other businesses and does not work for or under an outside authority. Independent contractors are contracted on a temporary basis and paid at the completion of a project upon which their contract will be terminated. An employee works for an organization and is covered by federal and state employment and labor laws, which entitles them to certain benefits such as social security, income tax withholdings, and workers compensation, among others per the United States government (U.S. Department of Health & Human Services, 2018).
$_$_$DEEZ_NUTS#0__titleDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#0__subtitleDEEZ_NUTS$_$_$
An employment contract should clearly define all terms and conditions of the employment relationship. The most common elements to any employment contract include the following:
$_$_$DEEZ_NUTS#3__titleDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#3__descriptionDEEZ_NUTS$_$_$
Common Clauses[edit]
Scope of employment[edit]
Each employment contract contains a job description including the range of activities that an employee is reasonably expected to perform. Scope of employment often identifies demotion, transfer to different responsibilities, and modification or increasing current responsibilities. Travel and relocation can also be discussed in this section.
Compensation and benefits[edit]
Compensation includes a negotiated base salary or earning potential for an employee, performance incentives, production bonuses, signing bonuses, equity, and stock options. Benefits include insurance (health, life, vision and dental), pension plans, paid time off, vacation time, sick and personal leave. This section will also include if or when an employee's salary can be reduced for instances such as suspension or company financial distress.
Probationary period[edit]
Some companies begin employment with new employees on a probationary basis. An employee is hired for a trial period that gives the company an opportunity to evaluate an employee's job performance and conduct. The duration of the trial period, training guidelines and assessment standards should be outlined in this section. If an employee's performance is found to be unsatisfactory, the employer can terminate the employee at the end or before the completion of the probationary period. This section should also detail how the employer will inform the employee if they wish to continue the employment at the end of the probationary period. A probationary period can only be extended if agreed by both parties or if the employment contract allow it.
Non-competition[edit]
A non-competition clause prevents an employee from taking a position with a competitor of their employer following the termination of employment. The employer must have a legitimate interest in restricting the employee from future employment and the clause must be reasonable in time, activities, and geographic area.
Non-solicitation[edit]
A non-solicitation clause prevents an employee from soliciting the employer's clients, customers, or employees for his or her own benefit. The employee also cannot solicit the employer's clients, customers, or employees for a period of time after the termination of the agreement. This section protects the employer's information and tries to ensure company loyalty.
Non-disclosure[edit]
Under a non-disclosure or confidentiality clause, the employee agrees to not disclose information that the employer deems confidential or sensitive to the business and to take reasonable steps to prevent disclosure. Non-disclosures are commonly used to protect trade secrets, client information and other valuable information. A non-disclosure agreement can continue indefinitely or can include a duration clause that stipulates an end date of the agreement.
Moonlighting & best efforts[edit]
A moonlighting clause details the employer's expectation that an employee with treat their employment with the business as their primary job and that other jobs will not interfere with their job performance. In some cases, a moonlighting clause will go as far as to specify that an employee cannot hold any other form of employment other than with their employer. The employer can also require an employee to report any outside work.
Intellectual property[edit]
An employer can assign all work products and intellectual property created by an employee during their term of employment is an exclusive right of the employer. This clause pertains to inventions that relate to the company's past, present or reasonably foreseeable future business or research endeavors. Employers can claim the rights to inventions that were created using company resources, including confidential information, regardless of if they were developed during normal work hours.
Arbitration [edit]
This clause specifies that the employer and employee will resolve disputes outside of court and with an arbitrator. In arbitration, the disputing parties each present their side of an issue to an arbitrator who will act like a judge and decide the matter without a jury. The court will then enforce the arbitrator's binding decision on the dispute.
Termination[edit]
The term of the contract should be included in this section, detailing a specific time after which the contract will be terminated or no longer be enforceable. Renewals can be included as automatic with options not to renew or can be elective by both parties mutually.
$_$_$DEEZ_NUTS#4__titleDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#4__subtextDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#2__titleDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#2__subtextDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__titleDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__subtextDEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__answer--0DEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__answer--1DEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__answer--2DEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__answer--3DEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__answer--4DEEZ_NUTS$_$_$
$_$_$DEEZ_NUTS#1__answer--5DEEZ_NUTS$_$_$