Terms to look out for in an Employment Contract
CRAFTING THE RIGHT EMPLOYMENT CONTRACT FOR YOUR EMPLOYEES IN 2025.
It is the start of another year, and the right time for setting new year resolutions. As one of your company’s 2025 resolutions, strive to engage a lawyer to draw up or review the employment agreements or contracts for your company.
Trust me—this decision will be invaluable!
WHAT IS AN EMPLOYMENT CONTRACT:
An Employment Contract is simply a signed agreement between an employer and an employee, the two (2) main parties to the agreement. Contracts of this nature are proof of the professional relationship which will exist between both parties and contain the terms to which the parties have voluntarily agreed to be legally bound by.
COMMON TERMS IN AN EMPLOYMENT CONTRACT:
These are the terms and conditions you will typically find in employment contracts:
JOB TITLE & DESCRIPTION OF ROLE:- It is important that in such a contract, the Job Title of the employee must be clearly stated, for example; “Pupil/ Junior Associate at Sarkodie Baffour Awuah and Partners”.
The Job Description must similarly be clearly stated to avoid any form of ambiguity or confusion. Job description of a Legal Counsel .
START DATE & DURATION:- A clause of this nature outlines details such as the date of commencement of the employment as well as the Duration.
Duration usually covers a temporary period in the case of temporal work; permanent and fixed-term.
COMPENSATION:- Details regarding the employee’s pay must be explicitly stated. How is the employee to be paid for the services he or she will render to the employer? Is the employee to be paid on a weekly basis, biweekly or monthly? Will the employee receive an hourly wage or a fixed salary? Are there bonuses, commissions or incentives to be given or paid to the employee? What are the statutory payments an employer is mandated by law to pay for the employee in respect of his or her employment like pensions or taxes?
WORKING HOURS:- Detailed information must be provided on the working hours and this must necessarily include information on the days and hours that the employee is required to work.
BENEFITS:- Under this clause, the employer is to precisely outline the benefits the employee will be subject to during the pendency of his or her employment like Health Insurance, retirement plans, paid lunch and any other benefits/ advantages to which the employee will be entitled by virtue of his or her employment in the company.
It is essential to also include any information on paid leave (vacation, sick leave, maternity, and paternity).
PROBATIONARY PERIOD:- This simply refers to a trial period for a new employee and it allows an employer to know if the employee is a good fit for his or her role. If there will be a probation period, then all salient information covering this period is to be provided in detail, like the duration of probation. Also, incorporate information on terms for the evaluation and confirmation of the employee.
TERMINATION CLAUSE:- This clause is to provide details on how the employment contact is to be terminated by both parties. Typically, information will be provided on the “Notice Period” required by both the employer and the employee to end the employment.
CONFIDENTIALITY AND NON-DISCLOSURE:- In recent times, this clause is gaining a lot of popularity as it serves to protect company information. The employee is contractually bound to desist from disclosing sensitive information about the company to which he or she might be privy to in the course of employment.
Additionally, provisions to restrict the sharing of trade secrets (if applicable)/ sensitive data must be embedded in the employment contract.
NON-COMPETE & NON-SOLICTATION CLAUSES:- Closely related to the above clause, a “non-compete and non-solicitation clause” will typically restrict an employee in the interest of the company. This may include a restriction on working with a competitor of the company after leaving the company. The Employer may also include a provision against the soliciting of his or her clients and co-employees post employment.
DISPUTE RESOLUTION:- Rather than running to court at the first instance of a dispute, an employer should seek to incorporate Alternative Dispute Resolution mechanisms such as negotiation, mediation, and arbitration in employment contracts. Mention the Governing Law that applies to the contract.
INTELLECTUAL PROPERTY RIGHTS:- This is essential especially in the case of employers whose employees develop or create new things as this clause will act to protect the company’s investment. This includes copyrights, trademarks, patents, among others. Such a clause should unequivocally state that the ownership of work or creations made in the course of employment rests with the employer.
DUTIES & CODE OF CONDUCT:- Over here, the expectations around professional behaviour and ethics must be clearly stated in the contract, as well as, compliance with the company’s policies and regulations.
AMENDMENTS AND MODIFICATIONS:- The procedures to be followed in the event of altering the terms of the employment contract must be spelt out in black and white in the employment contract.
SIGNATURES / ATTESTATION:- There is no better way of finalising a contract than both parties appending their respective signatures at the bottom of the contract. This in essence makes the contract legally binding on both parties. Equally important is the parties each presenting a witness who will sign as well. The date of signing must be included.
In conclusion, by prioritizing well-drafted and thorough employment contracts, you are laying a strong foundation for your company’s operations in 2025 and beyond. Take the step now– it is a resolution worth keeping!
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