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5 Clauses Every Employment Contract Should Include

By Aditi Mukherji, JD | Last updated on

There are certain clauses every employment contract should include. A good employment contract will make it crystal clear (or at least close to it) what exactly the parameters of the job are and what an employer's expectations are. You're trying to eliminate the element of surprise.

You probably already know to include certain things in your contracts, such as the terms of employment, job title and responsibilities. But here are five other terms every employment contract should contain:

  1. Compensation. Beyond the job's salary, state your policy when it comes to raises and bonuses. For example, do you review salaries annually? Is there a standard protocol for raises? Be sure to point out discretionary compensation based on job performance.
  2. Confidentiality. Including a confidentiality clause in an employment contract can help protect your company's trade secrets, data, client lists and other sensitive information. In fact, you may want to have the employee sign a separate nondisclosure agreement altogether.
  3. Tech privacy policy. Remember, there are laws protecting employees' workplace privacy. Show that you follow the law by clearly stating your (lawful) policy before employees begin using email or social media with company property.
  4. Benefits and sick days. Company policies vary widely, so clear the air. Spell out what benefits are offered, including health, life or disability insurance or retirement accounts. Also be sure to spell out vacation and sick day policies.
  5. Termination. Your employee contract should state the reasons and grounds for termination, and should also point out any notice requirements. Keep in mind, however, that not every employee is required to give two weeks' notice.

Actually there's one more clause you may want to consider adding: A method for resolving disputes relating to employment. For example, this can include the type of dispute resolution (like arbitration or mediation), the venue (a particular state or federal court), or the location in which you want to resolve the dispute.

Of course each business has different needs, so it may be best to consult an experienced employment attorney to make sure your employment contract has you covered.

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