Employers are not required to use an employment contract when hiring a new employee. However, employers and employees alike may find advantages to creating such a contract. In essence, an employment contract defines the relationship between the employer and the employee. It defines the employee’s job description and salary, in addition to any number of other terms. Issues that can be included in an employment contract include employee benefits, duration of the job, dispute resolution methods, grounds for termination, and non-compete clauses.
Employment contracts can be useful tools because they provide employers with a certain degree of control over employees. For instance, an employment contract can ensure that employees remain in one position for a period of time. Likewise, they can prohibit employees from divulging sensitive information about the business. And, by specifying grounds for termination, employment contracts provide a basis for employers to let employees go who are not performing well. All of these reasons provide good justification for employers to consider using employment contracts as part of their hiring practice.
