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Key Components of an Employment Contract

Employment contracts are probably the most important legal documents you will need for your business. They contain all of the requirements and standard terms between an employer and the employee. If you’re in the process of launching a business or are reevaluating your employment contract, below are some key things that should be included.

Employee job title

A detailed job description is important, as it distinguishes an individual’s role and the responsibilities entailed. It also outlines what is expected of them and their limitations.

Hours of work

Is the employee full-time or part-time? Are they salaried or hourly? Do they have to work weekends? The answers to these questions are important, since they determine the days and hours of work per week that the employee is expected to perform. Be sure to acknowledge lunch breaks, as well.

Pay detail

Pay detail usually pertains to when the employee is paid (usually weekly or bi-weekly). It may also designate approved payment methods, such as check or direct deposit. This can also include any bonus pay or overtime, depending upon the employee’s status.

Holiday entitlement and pay

This outlines the holidays on which the office is closed and employees don’t have to work. It also states whether these holidays are considered paid or unpaid.

Grievance, illness and jury duty pay

This delineates the time allotted for the loss of a loved one, time requested off due to illness, and the number of days that a person can take for jury duty. Also, it should be noted if any documents are required to prove the necessity of the time off (e.g. doctor’s note, jury duty notice, etc.).

Employment termination

Employment termination should provide a reason for dismissal, any notices or warnings that were given, and a date that the worker was fired.

Notice details

This outlines the amount of notice that the employee is required to give if they want to quit or end a contract. The document should specify the type of notice that is necessary (e.g. written letter).

When you hire a new employee, you should have them read the contract carefully before signing — and don’t make them feel rushed. You should explain or highlight the most important parts and offer them a copy to keep for their records. If the contract changes for any reason, you should ensure that your employee is aware of the changes.

If you aren’t sure how to draft a contract or if yours is complete, hire a Malibu business lawyer to help you.