Business owners hear the word “contract” and think, “I’m getting locked into something with this employee.” After all, the Commonwealth of Massachusetts has an “at-will” employment system. So, why would you want a written contract?
Well, consider this: Contracts are useful to clearly set forth the terms of the employment and YOUR expectations. Specifics such as how a bonus will be calculated, or whether a bonus is purely discretionary, are also important to put in writing.
An employment contract also provides a vehicle for presenting your new employee with a non-compete agreement. The beginning of employment is the time to present a non-compete. Once the person has worked for your business for a few years, issuing a non-compete is difficult and would require additional “consideration” (money). An employment agreement can also set forth confidentiality and trade secret protection. You may wish to have a contract that requires the employee to provide you with notice, if he or she will be leaving your employ. You might also, in turn, have a provision where you provide notice but reserve the right to issue pay in lieu of notice.
Since good communication with your employees is the key to effective human resources management, you can think of the employment agreement as one of the first steps to clearly communicate the specifics of the employee/employer relationship.
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