Employment contracts for small businesses

In this edition of “Ask the Board,” Chas Rampenthal of LegalZoom explains what needs to be included in employment contracts and agreements. When amending agreements it is important to be honest and to act in good faith. It is also important that the amendment does not change the nature of your employment relationship. If this happens, then your employee may be able to claim unfair dismissal if your employee is terminated for refusing the changes.

Producing an agreement to prevent the other side from stealing or using your ideas is very important in these situations. Moreover, many businesses expect their employees to come up with ideas, products, business strategies, and inventions. To help ensure you don’t miss addressing any important issues, it’s wise to develop an employment agreement template you can use for all of your employees.

To protect your business, you can have the employee agree to details about post-employment obligations. Siegel said these can include noncompetition, nonsolicitation and nondisclosure of confidential information clauses. No, employees cannot be disqualified for refusing to accept new employment conditions.

Advantages and disadvantages of an employment agreement

In addition, creating an employee handbook can help keep the employment relationship on the same page. New employees may not read their contracts closely, but an employee handbook can remind and help a new employee see some of what their employment contract requires. Having a simple employment contract is highly important for small businesses.

Vendor/Supplier Agreement

Next to a sales or credit agreement with a customer, a vendor or supplier agreement may be the most routinely used business contract. The comments made above about sales agreements apply equally well to an agreement with a vendor. In certain types of specialized vendor agreements known as “requirements” or “buyer’s option” contracts, the quantity term may be implied rather than stated. In an exclusive requirements contract, the purchaser agrees to buy all of its requirements for the specified goods exclusively from the seller.

Without them, misunderstandings can quickly turn into expensive legal battles. Learn about 7 types of employment contracts for small businesses and how to ensure they are enforceable under North Carolina law. As a small business owner, you might feel that employment contracts are unnecessary, especially if you’re just working with a contractor or remote assistant. However, there are certain legal responsibilities beyond payroll taxes that come along when you hire someone (albeit for a short period of time) to help you. With the right employment contracts in place, you can use the global workforce to your advantage in 2023. When your employee agreement expires and the employment relationship is severed, there is little to nothing stopping that employee from taking your sensitive and private company information to your competitors.

Some employees might

negotiate “double trigger” clauses, in which they can resign “for

good reason” (such as being reassigned to another department) and

still be entitled to a severance package. Many small business owners use the professional services of a law firm to craft most agreements. Because North Carolina law has highly intricate contract statutes, you need to avoid legal action by using the essential terms to keep your contracts airtight. Having a clear and concise employment contract is essential for small businesses. It establishes the terms of the relationship between employer and employee, providing clarity on expectations from both parties. An employment contract or contract of employment is a legal agreement between an employer (you) and an employee that covers all the terms and conditions related to employment.


As an initial employment contract, it does not include the entire agreement the actual employment contract will include later. Limitations on Computer and Internet Use

Employees often have access to business computers to do their jobs. A vital protection for the employer is to limit the employees’ computer usage, particularly of the internet, to business-related functions. Such limitations can be set forth in an employee handbook, where the employees should be required to sign an acknowledgment agreeing that they have read and understood and will abide by the company’s policies. Internet policies and agreements with employees can protect the business in the event that an employee accesses, downloads or uploads inappropriate material using a company-owned computer. Of course, employee computer and internet use policies are more effective if enforced regularly.

Employment contracts for small businesses

It demonstrates your commitment to following legal guidelines while promoting ethical practices with employees. D) Choose this option if the employee can terminate this employment agreement anytime and for any reason. H) Check if there is an employee handbook to refer to that will provide additional information about the employer’s leave policy. F) Choose this option if employees are not provided paid personal leave days. A) If the employee will receive overtime compensation, choose this option and list how much will be paid and describe what frequency constitutes overtime.

VAT schemes explained and how to choose the right one for your business

Before terminating an underperforming employee, the organisation must engage in performance management meetings and performance improvement plans. This allows the employee to respond to the complaints from the organisation and assists them to make improvements. Employment Separation Agreement – Otherwise known as a “settlement” or “severance” agreement, outlines the terms and conditions of an employee’s termination. The Employee agrees to all sections of this Agreement Employment contracts for small businesses in addition to any rules, regulations, or conduct standards of the Employer, including obeying all local and federal laws. If the Employee does not adhere to this Agreement, including any task or obligation that is related to the responsibilities of their Position, the Employer may terminate this Agreement without severance. Independent Contractor Agreement – Classified by the IRS as a 1099 Employee, is an individual or entity that is paid to perform a service.

We highly recommend that you have a written agreement in place as this provides better protection in care of a dispute as the terms and conditions of the arrangement are clearly set out. If consulting the employee does not resolve the issues, you should consider seeking legal advice to understand what options are available to you in order to manage the employee whilst minimising the chances of a dispute. All Business Kitz employment contracts templates are composed by lawyers using the most up-to-date Australian employment law. Before writing an employment agreement hiring parties should meet to discuss main employment terms such as hourly pay/salary, job title, and responsibilities. The agreement will typically be written under the company policy which governs vacation time, personal leave, and benefits.

It helps to protect both the employer and employee by outlining clear expectations and responsibilities. Creating an employment contract doesn’t have to be a daunting task, as there are many resources available online to guide you through the process. The first thing to include in an employment contract is the job title and description. This should clearly outline what the employee’s responsibilities are, including any expectations around performance levels or productivity targets. Employment contracts are important because they protect you and your employees, set clear expectations about the work, and form a legal relationship between your business and its workers. Also, as your business grows or changes, a contract will ensure a certain level of performance from your team (regardless of whether they are remote or on-site).

Read the employment agreement guide now

If you don’t have an explicit employment contract and instead rely on an implied one, you could find yourself in a “he said, she said” dispute. Employment contracts also help protect critical trade secrets,

and are especially critical in high-tech companies. An employment

contract can prohibit employees from revealing company secrets,

working for the competition or soliciting customers. Noncompete

agreements can be difficult to hold up in court, so you must be

careful in drafting them. Because it’s anticompetitive to prohibit

people from earning a livelihood in their field, courts generally

will enforce noncompete agreements only if they’re reasonable. This type of agreement lays out the terms and conditions under which you provide services and specifically spells out your responsibilities and liabilities.

To make sure the employees keep the proprietary information of the company confidential, you should require them to sign a Confidentiality and Invention Assignment Agreement. This agreement deals with the confidentiality issue, but it can also provide that the ideas, business strategies, and other work product developed by the employee belong to the company, and not to the employee. A non-disclosure agreement should be signed by possible employees before interviews to make sure important information about the business doesn’t get out. With a provisional patent application, the invention or product will be protected before the full patent filing happens. This allows the company to use a patent pending notice and set an official date to file the patent. The contract can be customized based on what terms are wanted for the business deal.

By drafting an employment contract today, avoid mistreatment and legal repercussions for both parties. Having a contract doesn’t just protect the employer—it also safeguards the employee. In every contract there is an obligation to act in “good faith” and to deal fairly with the other party. This provides important protection for employees, since it should deter the employer from breaking the contract unfairly.

Get Weekly 5-Minute Business Advice

As a small business owner, the possibility of facing lawsuits may seem unlikely. All business owners take on the possibility of facing legal backlash from previous employees or partners. Not only will these legal documents clearly define each employee’s duties and benefits, but they will also create a sense of stability in the workplace and protect both parties during future legal proceedings.

Leave a Reply

Your email address will not be published. Required fields are marked *