Chapter 11: Your Business And Employees
Employee Contracts A win, Win Situation
Protecting You and Your Employee Using an Employee Contract
 Hiring an employee can often help your business, but you should consider making an employee contract to keep you and your employee protected.
Taking time to prepare one now can save huge headaches late.
A Contract for Employment?
An employee contract establishes the terms of employment. They describe the relationship between the employer and the employee and can protect the rights of both parties.
Standard contracts work well for most employees, however, with some employees, specialty contracts will be needed.
For instance, if you are hiring someone who will have access to proprietary information - a technology or product that is owned exclusively by a your company – you will want an extensive contract that explains what the employee can and cannot do with that information.
What to Include in an Employee Contract
No matter how simple or complex a contract, there are certain things a contract typically includes. They are:
- Start date
- Description of job responsibilities
- Salary
- Bonuses
- Vacation
- Medical leave
- Benefits
- Stock options
- How often an employee is paid
- Number of hours per week
- Overtime compensation
- Performance reviews
- Pay raises
- Termination procedures
Having all the right sections in a contract will allow both parties to know what is expected.
Making your employee contract Legal
Although a standard contract may be used as a base, having a specific contract for each individual is best.
 Each employee will have different responsibilities and compensation. Having individual contracts, instead of a one-size-fits-all variety, will make your expectations clearer.
When writing the contract, you need to be sure that you are following applicable state laws.
For instance, some states have specific criteria for probations before firing. And all states have anti-discrimination laws to take into account.
You will also want to consider adding in a non-disclosure agreement.
A non-disclosure agreement (NDA) is a legal contract between you and your employee that will protect confidential information.
The best way to make a contract legal is to have an attorney draw one up for you.
Employee contracts are important. Without at least a basic contract, your business can become liable if any legal issues arise. It is always better to be safe than sorry.
What's Next
Next In This Guide
 Business Success Checklist: An Over View Of Items To Remember
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Using the Job Interview to Find the Right Employee for Your Business - Applied But Qualified? Finding an employee that suits your business is very important. With statistics that show 3 out of 4 sales people and 1 out of 4 administrative employees don't work out, understanding the hiring process will help you retain good people.
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