Employment contracts are an important part of the employment relationship. For that reason, employees and employers alike should know what to include in them.

What to include in an employment contract

There are several components that should be part of employment contracts including:

• The employee’s base salary;
• The employee’s term of employment;
• The employee’s health insurance benefits;
• The employee’s vacation and sick leave;
• How employment may be terminated;
• The process the employee can follow if they have a grievance; and
• Any restrictions on the employee behavior after the employment relationship is terminated.

If there is a non-compete agreement that is part of the employee’s employment contract, it generally should not be broader in scope than is necessary to protect the employer’s business. This can include the geographic area covered and the length of time the non-compete agreement lasts. Non-compete agreements, or a covenant not to compete, generally should be included in a new employee’s employment agreement. If one is provided to an existing employee, it should be supported by independent consideration such as a raise, bonus payment or improved terms and not simply a continued promise to work.

Other things to include in an employment contract

In addition to non-compete agreements which may be a common part of an employment agreement, employment contracts may include a confidentiality provision, arbitration provision or choice of law provision. Other provisions may be included as well.

At its most basic level, an employment contract can outline the job responsibilities of the employee and the expectations for their work. It should clearly lay out the duties and obligations of the parties. As is true of any contract, an employment contract can be breach and both employers and employees should be familiar with what they can do, and the legal resources available to them, in the event of an employment dispute.