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3 critical points in employment contracts

On Behalf of | Dec 15, 2023 | BUSINESS & COMMERCIAL LAW - Contract Disputes

Employment contracts are fundamental documents that outline the terms and conditions of employment between an employer and an employee. These contracts define both parties’ professional relationships, responsibilities and rights. 

For anyone entering an employment contract, it is essential to understand the key elements that should be specified in the document. Here are three critical points that should be in any employment contract:

1. Compensation structure

The compensation structure is a vital component of the employment contract. It should detail the salary or wages that the employee will receive, as well as any bonuses, commissions, or other forms of compensation that may be applicable. The frequency and method of payment, along with any deductions or withholdings, should be explicitly stated. In addition, the contract should specify if there are opportunities for raises, performance reviews, and the criteria for salary increases. 

2. Job description and duties

A clear and precise job description is another crucial element of an employment contract. This section should outline the specific duties and responsibilities associated with the position. It serves as a reference point for future evaluations and assessments of job performance.

3. Discipline and termination guidelines

Understanding the terms related to discipline and termination is critical for both employers and employees. The contract should detail the company’s disciplinary policy, including the procedures and consequences for various infractions. It should also clearly state the conditions under which an employee can be terminated, whether for cause or at will. 

A well-drafted employment contract is essential for a clear and transparent employment relationship. Both parties should thoroughly review and understand key elements such as the compensation structure, job description, and discipline and termination guidelines.