Provisions to Consider When Drafting an Employment Contract

Drafting an employment contract is an important part of the hiring and recruitment phase. It should be prepared well and reviewed thoroughly because the wrong words phrases might lead to misunderstandings that could lead to legal problems. A contract that is drafted well protects the rights of the employer and the employee.

There is no particular format and there are no specific legal requirements regarding the details of the employment contract that will be put in writing. But the most common and most helpful details include official title, employment status; start date; probationary period, if any, and the period covered by such period; the days or the hours or specific time that the employee is expected to be at his or her desk; the names of the employee’s immediate supervisor or supervisors; benefits; the pay rate; and the pay frequency. You can choose to remove some of these details or add other information. This just depends on what is appropriate to include for both the employer and the particular employee.    

The provisions that you add to your contract of employment would depend on the nature of the employee’s job; the products, information and processes that he or she will be exposed to; and the specific requirements of the company’s business.   

One of the most common provisions in this kind of contract is the confidentiality clause or agreement. This provision would typically state the employee’s promise to not share any information regarding the employer’s business, including the processes, formulas, hardware and software used, and the like. The confidentiality provision would also usually indicate the period covered: in some cases, for example, the agreement is valid up to one year after the employee’s resignation.

The non compete agreement or the noncompetition agreement is another provision that is commonly used. This states that the employee will not work for the employer’s rival company, engage in a similar business or solicit the customers of the employer for a specific period – a year, for example – after the employee resigns or leaves the company. In some cases, this kind of agreement specifies a location or area.  

You might want to add a clause or provision on exclusivity. The exclusive employment agreement states that as long as he or she is employed by the company, the employee will not work for or provide services for a company in the same industry or business.

 Another clause the most companies include in the contract of employment is the clarification regarding the existence of an agency relationship. A “No Authority to Contract” clause states clearly that the employer and employee have an employment relationship and not an agency relationship.  

When preparing an employment contract, a good rule of thumb is to always be concise and clear. Avoid ambiguous words and statements. And always be compliant with the current legal requirements on the local, state and federal levels. Make sure that the provisions in the contract do not violate the current laws. It is always a good idea to have an expert in employment law guide you as you draft the contract and review the contract once you’re done preparing the draft.