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Employment Agreement

In an ideal world, the relationship between the employer and the employee would always be pleasant and devoid of conflict. However, we know that the current business world isn't flawless, and we often run into employment issues at various companies. Some disagreements are largely motivated by commercial considerations, while others are purely personal. Regardless of the cause of the disagreement, one important document must be addressed: the Employment Agreement.

Definition 一

An employment agreement is a contract between an employer and an employee that specifies the basic conditions of employment and can be negotiated before or after the employee is hired. Written agreements are valued by law over oral or implicit agreements based on behaviour. The employment agreement becomes legally binding on both parties after it is signed, which means that if any party breaches the provisions of the agreement, they may be held legally liable.

The substance of an employment agreement varies depending on the demands of each company. To avoid disagreements and uncertainty about the work connection, one should take the time to thoroughly establish an employment agreement for each employee.

Why is it needed ?

It is in the interest of both parties made with a motive to be beneficial for employers and employees protecting their rights and business interests. It is essential that agreement must be made in such a manner as to monitor and regulate the behaviour of the employees even where they are no longer part of the organization for instance in securing the trade secrets and making them adhering to the company's policies and rules & regulations. Similarly, it is for the employees where it provides them with job security and assurance of the expected roles and obligations in the organisation with clarity on other perks and allowances in adherence to the company policies. In case of breach of the contract, the liability can be re-imposed or the compensation can be claimed from the party at violation.

What does an employment contract entail?

In general, an employment agreement contains key facts about the employee's job, such as salaries, benefits, termination processes, and the employer's and employee's respective roles and responsibilities. 

• Job Title: The title of the employee’s position as well as detailed description of the role. 

• Term: A term can refer to anything from a start date to an employee's work schedule to the duration of a project or the end date of employment.

• Remuneration: The amount of money one gets paid (monthly salary, wage and whether an employee can collect commission and if so, how much & etc.) 

• Benefits: A description of the many sorts of benefits that an employee may be eligible for (e.g., health insurance, dental checkup, etc.). 

• Vacation and Sick Leave: The company's vacation and sick leave rules, as well as sick and disability leave policies.

• Confidentiality/Non-disclosure clause: To ensure that an employee does not divulge any private information to competitors. 

• Dispute Resolution: It is a method for settling workplace conflicts (Arbitration/Mediation) 

• Termination:  Actions that are considered as grounds for dismissal. 

• Covenants Not to Compete: A legal agreement that prohibits an employee from competing against their employer for a set period of time.

• Severance: Severance pay refers to any monetary or other rewards that an employee may be entitled to when they leave their job. 

Advantages 

Benefits of a Workplace Agreement. The following are some of the benefits of an employment contract:

• Job security for employees and labour stability for employers – One of the most essential functions of an employment agreement is to ensure that the employee has a job and that the company has workers.

• Defines responsibilities and advantages clearly: There's no need to question the job's responsibilities, remuneration, or perks because they're all spelled out in the contract. Both parties are protected since the agreement is binding on both the employer and the employee.

• The confidentiality clause or non-disclosure agreement is the best technique for the employer to protect trade secrets or confidentially.

Key Takeaway 一

A binding document signed by an employer and an employee where the detailed specification of employment, terms, and conditions of employment, consideration, other benefits, liabilities, etc are mentioned. Additionally, an employment agreement remains active throughout the entire tenure of the signing employee. It is in both sides' best interests to make decisions that benefit employers and employees while also safeguarding their rights and corporate interests. It is critical that the agreement be written in such a way that it allows the firm to monitor and supervise employee behaviour even after they are no longer employed by the company, for example, in safeguarding trade secrets and ensuring that they follow the company's policies and rules and laws. Similarly, it gives job stability and assurance of expected duties and responsibilities in the organisation, as well as clarification on various benefits and allowances in accordance with business regulations. In the event of a contract breach, the liability can be re-imposed or restitution can be sought from the party that broke the contract.

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