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Advantages and disadvantages of written employee contracts

Employees are critical to the proper functioning of a business. However, in some cases, they may become a great liability. For this reason, some employers teeter between at-will and written employee contracts.

Before you sign your next employee contract, make sure it is the best decision for you and your business. There are strong advantages and disadvantages to hiring employees with written contracts.

Contract

As the name indicates, a written employee contract states the agreement between the employer and employee in written form. The contract usually includes different elements of the agreement between the two parties, such as:

  • Pay
  • Length of contract
  • Employee duties
  • Terms for contract termination

A few different employment laws in California govern employee contracts, and there are stiff penalties for deviating from the contract terms. Therefore, if the employer desires to let an employee go, it is not as simple as firing the person as with an at-will contract. However, an employer may have the option to add an at-will clause into the initial contract.

Advantages

Employee contracts are helpful when employers desire to retain quality employees. With a well-written contract, an employer can denote the set amount of time the person will work for the company, as well as the specific reasons for which the employee may leave the company. Not only does this help the employer avoid a sudden departure, it also creates job security for the employee, which may make the offer more appealing. This agreement can also limit competition if it includes a well-written non-compete clause.

Disadvantages

Not only does an employee contract solidify the employee's responsibility to the company, it also denotes the employer's responsibilities to the employee. If the employer fails to uphold all parts of the agreement, this can open the business to a breach of contract with legal ramifications.

It is clear to see there are pros and cons to enacting a written employee contract. Take some time to weigh your options and determine the best course of action for your company.

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