When is an employment contract necessary?

On Behalf of | Sep 25, 2018 | Blog

Business contracts can get complex. It is tempting for some employers to bypass employment contracts, as it is another box to check off the never-ending list. While it is true some businesses get by without writing employment agreements, a lot can go wrong. For small business owners and large companies, this is a costly risk.

Who needs one?

Most employees in middle management or lower usually do not require contracts. For example, an administrative assistant would not necessarily provoke a contract. On the other hand, higher-level employees have access to important company information, such as sensitive materials and details about clients.

There are many benefits to providing employment contacts, which includes:

  • Avoiding miscommunication. A good contract will accurately describe both the employer and the employee’s intentions. Everything about the job is in writing and shows clear expectations.
  • Providing protection. Employment contracts protect employers in a variety of ways. The document states grounds for termination, rules about trade secrets and ownership of materials. This can assist employers if any legal matters arise.
  • Resolving disputes. Speaking of legal matters, an employment contract is beneficial during business disputes. It outlines methods, such as mediation or arbitration, in case of problems.

There is no requirement that all employees receive a written contract. As mentioned before, high-level employees who are dealing with sensitive or confidential information usually sign agreements.

Either way, proceed with caution. Contracts imply promises. It is wise to have an attorney review employment contracts to cut the risk binding up a business. Being safe from the beginning is far less expensive than correcting mistakes down the road.