Why Should You Have an Employment Contract?

You rely on your employees to provide your business with the skills necessary to remain competitive and successful. However, recruiting and retaining employees can bring significant risks especially if you do not establish clear expectations.

An employment contract allows you to disclose your expectations formally, as well as address other critical aspects of the employer-employee relationship.

Encourage Responsibility

With a clear and rational agreement in place, you can encourage responsibility from your employees. According to Chron, you can address job-specific expectations in greater detail in an employment contract.

For example, for members of your sales team, an employment contract signed at the time of hire can discuss your expectations for performance-related goals and deadlines. This may include information about performance measurement to help your employees accurately gauge their success. With a clear understanding of what to expect, your employees may have more incentive to do their best and remain loyal to your company.

Add Context

Information gleaned from a posted job description and subsequent interviews can provide helpful information about what a job entails. However, an employment contract can add valuable context to help your employees better understand their role within your organization. A contract can discuss pay, benefits, the length of employment and the implementation of disciplinary measures.

When carefully written, an employment contract can remain a reliable reference for your workers when they have questions about their job responsibilities. You can also use it as reinforcement if a disagreement about expectations arises. For example, if an employee facing disciplinary measures disagrees about your actions, you can reference the employment contract to remind them of the disciplinary process and illustrate that you have followed protocols as agreed upon at the time of hire.