Why You Might Want an Employment Contract for an Employee
Sometimes you need to prepare an employment contract and have a new employee sign it. This is the case most often with professionals or top management individuals. Reasons you might want a contract include:
- When the employee would be difficult to replace. A professional with very specific skills or an employee who has knowledge of your market and your competition would be one example. Or it might be difficult to find and train a replacement in your market. In these cases, you would use the contract to limit the employee's ability to leave without notice and to give you time to find a replacement.
- When the employee has knowledge of confidential information, trade secrets, or other sensitive materials. In this case, you would want to include a confidentiality clause in the contract to prevent the employee from divulging this information during and after the end of the contract.
- When you don't want the employee leaving and going into competition with you. In this case, you would want the employee to sign a non-compete agreement, limiting his or her ability to compete with you within a certain time within a defined area and in a specific type of business.
You can see that in most cases, with hourly employees or lower-level salaried employees, you probably don't need a contract. But with professionals and top management, a contract can protect you against problems such as those outlined above. In some other special circumstances, you may decide that an employee should have a contract. For example, if you hire an office manager or administrative assistant, and that person deals with highly confidential information, you may want him or her to sign a contract.
Check with an employment attorney to discuss the need for a contract and specific contract language.
