What Does an Employment Agreement Do

An employment agreement is a legal contract that outlines the terms and conditions of the relationship between an employer and an employee. It is a vital document that safeguards the interests of both parties and ensures that both parties adhere to the agreed-upon terms.

An employment agreement typically includes the following key elements:

1. Duties and Responsibilities

An employment agreement will specify the duties and responsibilities of the employee, outlining what tasks they are expected to perform on a day to day basis. Job titles and descriptions should also be included.

2. Compensation and Benefits

The employment agreement will specify the employee’s salary or hourly rate, any benefits they will receive such as health insurance, vacation time, sick leave, and pension plan, or retirement benefits.

3. Termination Clause and Performance Expectations

The agreement will also include a termination clause, outlining the circumstances under which either the employer or employee may end the employment relationship. There will also be performance expectations outlining the standards of work expected by the employer and how performance will be assessed.

4. Confidentiality and Non-Disclosure Agreements

Employees are often privy to sensitive information about the employer`s business. To protect the business, employers may require employees to sign a confidentiality and non-disclosure agreement before being hired.

5. Intellectual Property Rights and Non-Compete Agreements

Employers may require employees to sign an agreement that the intellectual property they create while employed by the company belongs to the company. Additionally, employers may also require employees not to work for any competitors or start their own competing business during or after their employment.

6. Arbitration Clause

An arbitration clause outlines the mechanisms for resolving any disputes between the employer and employee. This helps avoid costly and time-consuming legal proceedings by settling any disputes outside a courtroom.

Having an employment agreement in place is crucial to protecting the interests of both the employer and the employee. Employers can avoid legal implications that arise from poorly defined terms of employment, while employees can have clear expectations and better job security.