How to Prepare a Small Business Employee Contract
Hiring an employee can be a great help to your small business, but even if you're hiring a friend or previous colleague, you should consider creating an employee contract. Employee contracts protect both the employee and the employer by establishing important job expectations and the terms of employment such as hours and rate of pay. Taking a small amount of time to prepare a small business employee contract can save huge headaches down the road.
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Instructions
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Include Basic Information in the Employee Contract
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Include the employee's start date in the employee contract.
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Describe what an employee's job responsibilities are in your small business.
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3
Explain the compensation package that an employee will receive from your small business. This includes salary, bonuses, vacation, medical leave, benefits and stock options. Also include how often an employee is paid.
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4
Specify the hours the employee is expected to work. Indicate whether there is overtime available and explain the pay structure for overtime.
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Include how performance reviews and pay raises are to be conducted.
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Use an employee contract to explain termination conditions, including how much notice an employee must provide before he or she can terminate employment.
Use an Employee Contract to Legally Protect Your Small Business
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Create an individual employment contract for each employee rather than trying to use a standard contract for your small business. Each employee will have different job responsibilities and compensation packages based on his or her experience.
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Build a trusting environment by ensuring both your rights and their rights in the employee contracts. The employee contract will show your employees that you value their efforts.
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Determine which state's laws will govern the contract.
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Indicate if there is an employment probationary period and how long that period lasts. Be sure to include what the conditions of the probationary period are.
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Write a nondisclosure agreement into your employee contract to prevent an employee from sharing any trade secrets from your small business during and after employment.
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Specify if the employment is considered "at-will" and can be terminated at any time.
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Tips & Warnings
Have a civil attorney review your contract to make sure it is legally binding, or hire a lawyer who has experience with employment issues to write your employee contracts for you.
Don't downplay the importance of employee contracts. Not having at least some kind of basic employee contract can compromise your position as an employer if any legal issues regarding pay, hiring or firing arise.
