Creating an Employee Agreement

2 women shaking handsWhether you’re about to hire your first employee, or already have built a staff, you should create an employee agreement so your employees know exactly what is expected of them, what the job entails, who they report to, etc.

An employment agreement is a legal contract between your business and the employee. There are certain terms and conditions of the employment that both parties need to agree to, especially if your company is a corporation with bylaws and shareholder agreements. You can easily find a template for an employee agreement online, but it’s a good idea to have an attorney look it over before using it. Here are some key elements your employee agreements should include:

The basics: Every agreement should start with the date, the date of hire, the position title, the employee’s name, the employer name and the employer’s address.

Responsibilities: In the job duties section, include a detailed description of the employee’s responsibilities. Also specify how many hours are required, where the work will take place, and the names or positions of the employee’s direct managers.

Compensation: Is the employee being paid a salary or an hourly wage? Are there any commission or bonus programs they are eligible for? State how often they’ll get paid, how freqently employee reviews are conducted and how (or if) any cost of living increases are calculated.

Benefits: Include information about health insurance, retirement plans, vacation, personal/sick days, telecommuting and anything else that would be considered a benefit. If only certain employees are eligible for benefits, such as if there’s a probation period, make sure that is stated.

Termination: You must clearly document why and how an employee can be terminated and what the procedure is. For example, if constant lateness is grounds for termination, say so and be specific as to what constitutes excessive tardiness.

Other: If you have other issues in your company such as confidentiality or non-compete clauses, make sure those are in the agreement also. Also important: computer security policies, break times, safety and sexual harassment policies. Have a place for the employee/employer to sign and date the document.


Photo courtesy: Monkey Business/Thinkstock

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