Employment Agreements: Protecting Both Employers And Employees

Content

• What is an Employment Contract?
• Essential Elements of Employment Contracts
• Why are Employment Agreements ne
• What are the various forms of Employment Agreements?
• How do you manage Employment Agreements?
• Dock 365 Contract Management Software

The relationship between employers and employees must be based on trust and clarity. The parties should agree on and formally define their rights and responsibilities for the hiring process to go more smoothly. In these situations, all legal agreements, from written to oral to casual to freelance, ensure a secure work environment. This blog post will discuss the value of employment contracts, the essential components they ought to contain, and how they can safeguard both parties.

What is an Employment Contract?

An employment contract is a legally binding agreement between employers and employees outlining the terms and conditions of the relationship. It establishes a formal framework defining each party's rights, obligations, and responsibilities. 

There will be less chance of future disputes because both parties will know what they are getting into, including duties, salary, duration, benefits, and confidentiality. To meet their goals, employers can establish precise rules regarding job descriptions, pay scales, and termination procedures. Also, these agreements safeguard the rights of employees and ensure they understand their obligations and rewards. 

Essential Elements of Employment Contracts

1.  Job Title and Description: The first essential element of an employment agreement is a clear job title and a detailed job description. It outlines the employee's duties, responsibilities, and any distinct tasks they must perform. Clarity in this area helps set the foundation for performance evaluations and expectations.

2. Compensation and Benefits: Employment agreements must explicitly state compensation details, including salary, bonuses, and commission structures. Additionally, they can dictate any benefits, such as health insurance, retirement plans, and vacation time. Transparency regarding compensation helps avoid confusion or disputes down the road.

3. Work Schedule: The agreement should specify the employee's work schedule, including standard working hours, overtime policies, and any flexibility in hours. This section is crucial for both parties to understand expectations regarding attendance and availability.

4. Additional Duties: These provisions outline the additional tasks that an employee must complete in addition to their duties during employment. Depending on the industry and position, they can broadly describe the duties or include specifications regarding daily, weekly, or monthly goals. 

5. Confidentiality: Employment relationships involve sharing sensitive information and intellectual property. Businesses can protect this data from getting into the wrong hands by including confidentiality clauses in employment agreements. They can prevent employees from working with direct competitors for a specific period. 

6. Termination: These provisions detail how and when the parties can terminate the employment relationship. It covers notice requirements, grounds for termination, and the return of property and credentials. The termination clauses must comply with state, industrial, and organizational regulations.

Why are Employment Agreements necessary?

These legal agreements define the roles and obligations in an employment relationship. Businesses can avoid future breaches and disappointments by clearly defining expectations in advance. They protect both employers and employees by setting clear guidelines. The agreement guarantees all parties are on the same page regarding goals and rewards throughout the employment relationship. 

Employers can use these agreements to help prevent disputes over job roles, compensation, and termination processes. They safeguard their rights and ensure they understand their obligations and benefits for employees. Employers can also include requirements like data security or confidentiality that are unique to their industry or organization. This protects the organizations’ interests and builds trust between the parties.

What are the various forms of Employment Agreements?

When it comes to employment contracts, there is no one-size-fits-all solution. Depending on the business type, job position, and jurisdiction, parties must create legal agreements that best suit their needs. Furthermore, they must follow organizational, legal, and industrial regulations. For instance, employee agreements in California must include harassment, discrimination, and retaliation prevention policies. Here are the most common HR contracts businesses consider while onboarding employees:

Full-time Contracts

These contractual agreements are for permanent employees who work a full workweek. The documents specify work hours, benefits, vacation time, paid holidays, salary, and other relevant details. Unless the employee or employer ends the relationship, there is no fixed end date. It encourages long-term commitments from staff members for drawn-out work projects. The specifics of full-time work hours (30-45 hours) and employee benefits vary by business. These are typically written to clearly define roles and responsibilities and avoid confusion in the long run. 

Part-time Contracts

Part-time employees work fewer hours than full-time ones, and these agreements specify that. Depending on the jurisdictional laws, employers must also lay down clauses outlining flexible hours, employee benefits, protection, wages, and the onboarding process. For example, if a part-time employee regularly works fewer than 20 hours per week for a covered employer, they may be eligible for paid family leave in New York. Typically, they exclude information about PTO, insurance, and long-term aids only available to permanent staff.

Fixed-term Contracts

These legal agreements have a specific start and end date for the employment. Companies that hire temporary workers for a particular purpose or a set amount of time typically use fixed-term contracts. These contracts may contain long-term employee benefits, termination policies, and job security details, contingent on organizational and jurisdictional laws. Businesses can extend or renew the contract if the project scope requires more time.  

Zero-hour Contracts

Businesses utilize these employment agreements to onboard workers without fixed or minimum hours. These employees remain on call, and the employers offer work when available. It is up to the parties to decide to work as much or as little as possible. The contract specifies the payment rates, schedules, legal protection, and responsibilities. Also known as casual contracts in the US, they’re legal and common in the service, healthcare, and hospitality industries.

How do you manage Employment Agreements?

Growing companies have a large workforce and must handle contracts with all of them. HR and legal teams must stay on top of them throughout the employment relationship to uphold terms, regulations, and deadlines. Excel sheets, calendars, drives, and other outdated systems can impede businesses from effectively managing legal agreements. Parties risk losing track of pertinent dates, the process taking too long, and not finding contracts in time. Organizations can adopt the following strategies to overcome HR contract management challenges. 

Employment Contract Templates

Businesses need to be able to quickly and easily generate contracts to hire employees. Contracting can take longer if legal agreements are made from scratch each time. Instead, parties can utilize pre-written templates to draft various HR agreements. Legal teams can ensure the content complies with organizational, legal, and industrial standards. As a result, there is no needless delay in processing contract requests. HR departments can self-serve agreements by auto-filling relevant fields in the templates. Legal people can also maintain a clause library with provisions critical to the employment agreements, such as termination, confidentiality, variation, etc. 

Automate Custom Workflows

Employment agreements must go through multiple stakeholders for reviews, approvals, and signing. Carrying out these processes through email or chats can be time-consuming. It will be overwhelming for the parties to keep track of the contract's development. Most contract management systems enable users to automate the contracting process. They offer custom workflows to route legal agreements to relevant reviewers and approvers. Parties can set up notifications and deadlines to guarantee the contract progresses without delays and hurdles. Consequently, HR, finance, legal, and other departments can effortlessly collaborate on contract management. 

Organize Contract Storage

HR contracts must be easily accessible to businesses throughout the employment relationship. Storing legal documents across drives or folders reduces their searchability. Monitoring compliance, milestones, and amendments becomes challenging as organizations scale. Businesses can manage the hiring process more easily by centralizing contract storage. Digital repositories allow users to organize, search, and retrieve employment agreements with little effort. They can quickly retrieve pertinent information by sorting them by party, department, or date. HR departments have legal documents available for amendments, terminations, and renewal.

Electronic Signature Solutions

Wet signatures and email chains can delay the signing process. Electronic signatures offer a secure and legally binding solution for employers and employees to execute contracts. They can use custom workflows to direct employment agreements to relevant signatories. Multiple stakeholders can sign them from any device at any time. They have audit trails and real-time notifications to bring accountability in the execution phase. Contract management systems with electronic signature solution integration allow businesses to draft, negotiate, and execute legal agreements within a single platform.

Dock 365 Contract Management Software

Dock 365 provides a one-stop shop for automating HR contracting procedures for Microsoft 365 users. Businesses can utilize Teams, Outlook, Word, and other everyday applications to manage their employment agreements. They can digitally store contracts securely within their existing SharePoint repository. There’s no need to trust third-party sites with their sensitive information. 

Companies can execute contracts without hopping between platforms by using leading electronic signature solutions like DocuSign, Adobe Sign, and Sertifi within Dock 365. Bulk action allows parties to edit, approve, and sign multiple agreements in no time. Within minutes, the AI-powered tools extract, review, and summarize contracts from vast amounts of data.