Entrepreneur 101: Everything You Need To Know About Employment Agreements
Are you dealing with a high turnover at your business? If this is the case, or if you’re getting ready for a big hiring wave, you should consider an employment agreement.
Employment agreements are there to protect all the parties involved. Keep reading for everything you need to know about them.
What is an Employment Agreement?
An employment agreement is a contract. It’s done between the employer and an employee that binds them to follow certain terms.
In an employment agreement, both parties set the terms for certain aspects. These include benefits, wages, duties, responsibilities, termination procedures, and noncompete clauses.
Advantages of an Employment Agreement
Employment agreement allows employers to specify the responsibilities of the employee. They can be as specific as they will like.
Employees don’t have to worry about performing tasks that are outside of their contract. And employers are able to control certain aspects of the employment.
An employment agreement allows for a clear negotiation that lists the demands and expectations of each of the parties.
Employment agreements foster a positive and trusting relationship between employer and employees.
Employment agreements provide them with a certain level of organization, structure, and specify the tasks of the job. It makes it easier for them to follow up with employees and create rapport.
For employees, an agreement allows them to feel a sense of security and stability, especially when the length of employment is written in the contract.
The contract also serves as a piece of evidence should a dispute ever arise.
Disadvantages of an Employment Agreement
Employment agreements can limit the ability to negotiate the terms for either party. This can present as a disadvantage.
For employees, it will make it nearly impossible to change jobs before the contract is over.
The pressure of the contract might also get to both parties. They will feel like there’s a constant watch to follow through with the terms. If any of the parties breaches the contract, they might feel like there will be legal action.
Types of Employment Agreements
There are different types of employment agreements. It depends on the industry and nature of the work.
Confidentiality Agreement: This type of contract prevents the employee from disclosing confidential information.
Noncompete Agreement: For this agreement, the employee agrees that for the determined amount of time he or she won’t work for a rival business.
Exclusive Employment: Employers add this provision to prevent employees from seeking other jobs. The clause limits to a similar industry as long as they’re employed by the company.
Termination: The contract will also discuss any terms of termination. It states under which circumstances the employer can end the employment.
Employment Agreements: The Bottom Line
Although employment agreements have their advantages and disadvantages, they’re there to protect the interests of employers and employees alike.
They can include termination, confidentiality, compensation, and noncompete clauses.
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