Basic Elements of the Employment Contract?

Employers want an employment contract that protects their businesses and prospective employees while ensuring a conducive work environment. Both employers and employees reap the benefits of a good employment contract. 

An employment contract defines the employee-employer relationship and outlines more elements than a standard employment agreement. Drafting an employment contract is not easy; you may need to consult a Toronto employment lawyer.

Elements of an Employment Contract

The elements of a good employment contract can include:

1. Job Description 

A good employment contract should provide prospective employees with a detailed and precise description of the vacant position. The details can include:

•  The official title of the position;
•  Duties and responsibilities of the job;
• Work schedule;
• Remuneration details, and more.

Clear, concise, and unambiguous language should be used to ensure each party  (employer and employee) understand their duties, obligations, and expectations.

An employment contract can also include performance goals to be achieved and metrics of measurement. A detailed contract ensures a mutual understanding between employees and employers, promoting a professional and efficient work relationship. 

2. Non-disclosure/confidentiality Agreements 

Sensitive business information should be protected at all costs. That said, employers should note any information that is available or accessible to their employees. 

Any sensitive business information, such as trade secrets and client lists, should be confidential because your competitors, rivals, or enemies can use such information maliciously. Non-disclosure agreements should specify the sensitive data and who can access it. 

3. Duration and Terms of Agreement

A good employment contract should specify the duration of engagement and the terms. Additionally, your contract should stipulate the conditions for a contract extension, reduction, or termination.

4. Performance Expectations and Requirements

As mentioned earlier, a good employment contract should specify performance expectations and requirements. Employers should include production goals and revenue targets they expect from their employees. 

For instance, you can draft revenue volume expectations in a sales-based position. Performance barometers help to hold new employees accountable.

5. Compensation and Method of Calculation

Prospective employees expect their contracts to include compensation details, including how such compensation is calculated. 

The negotiated and agreed salary should be included in the contract. 

Specify the employee's base wage and the method of payment, which should either be salary, hourly, or commission based. 

6. Benefits and Premiums

The incentives or perks attached to a job should be included in the employment contract. Employment benefits can consist of:

• Health insurance;
• Dental and vision insurance;
• Family and medical leave;
• Disability insurance;
• Retirement savings;
• Life insurance;
• Paid time off (PTO)
• Stick options;
• Commuter allowances;
• Telecommuting and work-from-home options;
• Wellness programs, and more.

7. Termination and Severance

An employment contract should specify the conditions that can trigger termination and what happens when an employee is fired with or without cause. Ensure both scenarios are addressed, especially the applicable severance terms in each incidence.

Employers should always follow the labour guidelines related to the termination of employees to avoid wrongful termination lawsuits. The contract should also state whether a fired employee can or cannot start a similar business within your jurisdiction of operation. The restrictive clause should specify the active period of the policy. 

Restrictive clauses or covenants protect businesses from unfair competition. However, employees can protect themselves by requesting their employers to include a clause that safeguards their prospects or future job opportunities. 

How can an Employment Lawyer Help?

An enforceable employment contract helps employers and employees avoid stress and unforeseen challenges. Businesses risk costly lawsuits and hefty fines depending on the facts of a case.

Unfortunately, some companies hire employees without signing contracts, exposing themselves to more troubles than benefits. Employers should continually review employee contracts to avoid violating their rights.

Thriving employment relationships and conducive work environments promote talent retention while reducing employee turnover.  Drafting a good employment contract can be stressful if you don't have a legal background because it needs the application of employment law. 

An employment lawyer can help businesses draft employment contracts that satisfy the parties' needs in an employment relationship. Additionally, employment lawyers can offer legal representation to employees or employers when necessary.

Companies should not hire new employees without offering them employment contracts that have been thoroughly reviewed and drafted by experienced and skilled employment attorneys.

Employment Contracts Red Flags

Although most employment contracts are drafted with the employer in mind, employees can still identify unfavourable terms in an employment contract. Here are the common red flags you should watch for when looking for a job:

• Overly broad non-compete clauses;
• Complete ownership of your intellectual property;
• Breach of contract provisions that only favor the employer;
• Unreasonable breach of contract provisions;
• Any unilateral terms, conditions, or requirements.

Employment contracts allow employment relationships to thrive in a mutually beneficial manner. If in doubt about your employment contract, consult a legal professional specialising in employment or labour law.