Importance of Employment Contracts for Employers and Employees.
Importance of Employment Contracts for Employers and Employees.
By Said Ul Amin ꘡Submitted on January 10, 2023.
In the modern world. we live in, everything needs to be done by the book. If not, there can often be nasty repercussions, and when it comes to running a business, it's best not to invite it gladly. In the public sector alone, about 31% of employees experience some form of conflict that is common in the workplace.
With that said, it's good to do everything you can legally and correctly. Most businesses and those in a position to hire employees will have an employment contract. This article will discuss what an employment contract is and why it is so important to have one.
There are also some helpful tips towards the end when entering into an employment contract for the first time.
Employment Contracts.
What is an employment contract?
Employment contracts are legal agreements between an employee and an employer that provide written acknowledgment of terms between both parties.
Depending on the type of employee the employer is hiring, this may affect the type of contract they provide. The employment contract will contain relevant information regarding the employer's role and various aspects of working.
You will usually find working hours, pay, and terms of employment. There are many employment contract templates available online for those who are not quite familiar with the structure and how to draft them properly.
Both Parties are Legally Protected.
Any type of contract is good because it is a legally binding contract. Whenever an employer wants to hire a person for their company, they want to make sure that the person they are hiring will benefit the company.
The same goes for a person who is looking for a job and wants to join a place that does everything legally and legitimately. This Agreement shall be protected by both parties when it is prepared, agreed upon, signed, and dated. Thus, both parties should have had the opportunity to dispute or negotiate anything within that first draft and be happy with the agreement.
Safety on both sides can help keep the relationship trustworthy and respectful. This agreement can be seen as the basis of any employee/employer relationship. Without this foundation, either party can find themselves in some kind of trouble.
The agreement may enable either party to terminate the agreement if there is a reason to do so. For example, the employee may want to quit, or the employer may uncover a breach of contract.
Outlines Everything Expected of Either Party.
Any type of employment contract is likely to be very detailed. It will contain everything an employee needs to know before starting their role at the company. For the employer, it's an opportunity to detail everything needed to make the role valuable to the company.
Communication is important, and the contract clearly outlines everything that is expected of both parties. 64% of businesses see communication as a key priority in their strategy, values, and purpose, there is no doubt that it is essential.
In some businesses, there can often be some degree of miscommunication or lack of communication, and for you to avoid this from happening, these agreements are beneficial. Having good communication in everything that happens in business will help it succeed and grow.
From the employee's perspective, it is useful to know what the employer expects of them and what they do for the business. This is often detrimental to their own happiness and appreciation of work.
Enforces Accountability Where Necessary.
If everything goes as expected, there is very little chance that anything will go wrong. However, this is wishful thinking when it comes to business and workforce participation.
Things don't always go smoothly, and in the case of employment, not every employee or employer behaves appropriately. Sometimes disputes can arise in the workplace, which can result in legal action by either party.
An employment contract is a written document that is signed and dated. Therefore, it serves as a proof of mutual agreement and evidence that can be used if either party finds it necessary to do so.
For the average business, there is often a lot of confidential data that the company owns, whether it's related to the company itself or trusted by their customers to store.
The employment contract shall ensure that confidentiality is maintained when employees are accessing such data for work purposes.
Data security is a major concern for businesses today, especially since 95% of cyber security breaches are caused by human error. You really can't be too careful!
In the agreement, there will likely be more detail depending on the employee's role and how much influence they may have over company data. For example, some employees may have access to more data than others. It is good to pay attention to this part of the contract for accuracy.
Keeping privacy and data security at the top of your list as a business will also strengthen relationships and trust with your customers.
Builds a Trusting Working Relationship.
A successful company often depends on the happiness and productivity of its workforce. Companies with highly engaged workforces see around 21% higher profits as a result.
As mentioned above, with a contract, this trust and dependence are created between the two parties.
You should do everything possible to strengthen this relationship from the beginning. Your employees are an integral part of the business, and if you're not ready to enter into a legal contract or one that isn't detailed enough, that's not a good start to a working relationship.
Contract creation should be open to discussion. Even though the employee has accepted the job and the employer has made an offer to the employee, there may still be some room for negotiation if neither party is happy with the deal.
Tips for Creating an Employment Contract.
So now that you know the importance of employment contracts, it's important to cover every detail. With that said, here are a few top tips when creating one.
Remember the Basics.
Some basics are important to include and will be important information regarding the role. Typically, this will be the job title, department, and department head or manager for the employee.
This will also include the location of the business, so don't forget it!
Salary and Benefits Package.
It's not all about the money, but it's important that your employment contract includes details and payment. Remember, the details here may vary depending on the employee you are hiring and whether or not they will be included in the benefits package provided by the company.
There may also be levels of benefits that are available depending on the role.
Annual Leave, Sick Pay, and Parental Leave.
There are certain rights that an employee is allowed to have in terms of annual leave, sick pay, and parental leave. In this part of the agreement, you can outline the individual benefits that the employee receives while taking leave.
Type and Duration of Employment.
Your employees, not all of them may be working full-time, and there may be some on fixed-term contracts and others on temporary contracts.
The employment contract will also mention the type and duration of employment as well as overtime.
Policies and Terminations.
Most businesses will have privacy policies regarding internet and data use, as well as termination procedures if either party wants to end the contract. The notice period will also be mentioned here.
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