Liability Insurance

Employment contracts, though not required by law, can be very beneficial for an employer when hiring employees under specific conditions.

It is a written agreement that can guarantee what the employee will be receiving with that employer. An employment agreement can specify wages, conditions, life insurance benefits, method of payment, or be a certain requirement the employee must follow while employed.

One of the most common employment contracts deals with grounds for termination – one of the most critical Human Resource management issues. Almost every job you will apply for, or receive, will have you read over their specific termination policies. It can be based on how many times you are late or absent in a given time period, if a harassment issue happens, if you don’t do your job correctly, and many other factors. After reading the contract thoroughly, the employee signs that contract and is expected to abide by these procedures. This helps to protect the employer against lawsuits that have to do with wrongful termination and limits the amount of unemployment insurance, if any, they have to pay that employee after they leave. They also specify procedures to follow in the event of an arbitration or mediation dispute.

Among competitive companies, many employees will have to sign an employment contract that has many clauses that deal with non-disclosure and limits the employee from learning trade secrets and either passing them on, or opening a competing business. This is very important as an employer could potentially be bankrupted if an employee decides to disclose trade secrets, upcoming projects, or specific information that deals with the company itself. This could give the competition the means to put out a similar product faster and steal ideas they might not have had themselves.

Employment contracts sometimes specify a term of employment such as how long a probationary period lasts and can even have the employee required to give a certain amount of notice before they leave the job. These contracts help protect employers in the situation where disgruntled staff end their employment abruptly without giving adequate notice of termination. In addition, a set probationary period will allow employers to fire that employee without cause if they feel they are not doing their jobs properly, are stealing from the employer, or any reason at all.

Employment contracts are a great tool for employers to use but also help the employees. An employee will be able to know exactly what they will be required to do, how they will be paid, the insurance offered, and what will get them terminated. As more and more companies get sued, they are forced to increase the size of their employment contract and add new clauses to it. This helps protect them from people who just want a job so they can sue them later down the road.