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Important factors to consider when drafting an employment contract

On Behalf of | Nov 22, 2021 | Business Law |

As a business owner, it is likely that you have invested a lot of time, effort and finances into making your company a success. Furthermore, your employees have probably played a valuable role in growing the company. As a result, it can be beneficial to ensure that all parties are as happy as possible.

One way to ensure that the best interests of all parties are protected is to draft sound legal agreements. Not only can watertight contracts ensure that profitability remains high, they are also an effective way to avoid disputes and litigation. Outlined below are three important factors to consider when drafting an employment contract.

Specific details about the role

It may sound obvious, but it is important that any employment contract precisely describes the duties that a person is expected to carry out. Additionally, terms could include how their work will be evaluated as well as who they are to report to. Moreover, the majority of people work to earn money. Thus, information about compensation, holiday entitlement, bonuses, and other benefits ought to be considered. Importantly, ensuring that the employee is classified correctly can significantly reduce the chances of disputes arising.


Your company may rely on possessing unique knowledge, techniques, or methods in producing its assets, otherwise known as trade secrets. It could be in your best interests to make sure that these are protected from rival firms. Including terms of confidentiality within an employment contract can be extremely helpful.

Termination conditions

Not all employment relationships last for an indefinite period. Therefore, it is important to include terms about the termination of employment. For example, information might be included stating how much notice each party is expected to give. Also, you may wish to protect your interests by adding conditions that state that a former employee is not allowed to work for a rival for a specified period or start their own company in the same sector.

Employment contracts have a vital role to play in business relations, so it is helpful to have a firm grasp of some fundamentals. If you find yourself in a legal dispute as a business owner, you should know that you have legal rights.


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