Though written contracts of employment are not required by U.S. law, employers still benefit from providing them in several ways. Most importantly, a written contract defines the roles of the employer and employee. If the working relationship ends poorly, this definition of roles helps employers if they have to take part in an employment tribunal. The written contract acts as evidence that an employer can use to prove their case.

Written contracts also allow you to detail workers’ rights and the benefits they’ll receive when working for you. This is essential information, even with a verbal contract, and having it in writing again shows that you have provided the proper information to your employee.

So, your HR department needs to know how to draft a good employment contract. With these tips, it can do just that.


Tip No. 1 – Start With a Hiring Letter Template

Happily, you don’t have to start from scratch when writing an employment contract. Several automated contract drafting services exist to help you get started. The best software provides you with contract and hiring letter templates that contain the legal language necessary for such important documents. Plus, your contract automation technology should allow you to make edits while highlighting potential issues with the document draft.

Starting with a hiring letter template ensures you start your initial communication with a recruit on the right foot.


Tip No. 2 – Specify the Role

While a hiring letter template helps you easily handle the legal elements, you still have to specify the role you’re offering. Your template may provide a designated area to do this. Your job is to dig into what the role entails by focusing on the key responsibilities your new hire has.

The key here is that you don’t miss anything. For example, you may have a small business that’s hiring a new salesperson. However, the size of the business means you may also need that salesperson to occasionally field customer service complaints. Make this clear in the employment contract so your new hire doesn’t think you’re adding extra responsibilities onto their plate.


Tip No. 3 – Lay Out the Terms and Conditions

Building on the need to specify the employees’ rights, it’s a good idea to define the specific terms and conditions of employment based on your location. For example, employers in the United States have to tell employees about vacation pay, work hours, and severance pay. This information may vary depending on the state your company is in. You can also use this section to discuss any organizational terms, such as your dress code and sick pay policy.


Tip No. 4 – State Contract Termination Information

In addition to talking about the terms of employment, you must also state the conditions for termination. Focus on both sides here, rather than solely talking about the employer’s conditions. Elements to cover include:

  • The notice period that each party must provide to terminate the employment contract.
  • Any bonuses or severance that is paid upon termination. It’s also worth discussing the conditions attached to severance pay. For example, an employee that chooses to leave may not have a severance entitlement whereas somebody who is dismissed may.
  • Any special grounds for employment contract termination. These are typically any offenses that could lead to the employee getting fired.

Much like with the employment contract, good contract drafting software can also provide you with a sample letter of dismissal to use if you need to terminate an employee.


Tip No. 5 – Get Legal Assistance

Poorly-drafted employment contracts can lead to legal issues later on. To avoid this, consult your company’s legal team during the drafting process. They can help you to determine what information you have to provide versus the optional information that you don’t need to include. A good legal team will also ensure you write the contract in a way that protects your business.

But what if your company doesn’t have a legal team.

Again, contract automation technology can help. Many of these software packages offer an automated legal contract template for employment contracts. Most are updated regularly with the help of legal experts to ensure they meet the relevant criteria.


Contracts Are Crucial

While it’s tempting to speed up the employment process by skimping on your employment contracts, this approach can damage your business. Without a strong contract, you leave yourself open to legal action if a former employee has a grievance with your company.

Using these tips, you can draft watertight employment contracts that provide the essential information while protecting you. Start with a hiring letter template and build up from there. You’ll end up with a contract that you can replicate and edit as needed.




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