Why Employment Contracts Are for All Sized Businesses

Small businesses sometimes believe that legally binding employment contracts are for the larger players in business, but that isn’t true.  A contract of employment sets out the rights, duties, and obligations of the employer and the employee.  By having an employment contract signed by both parties, both parties gain a level of protection in case there are problems with the relation later on.

All employment contracts must include an obligation for the employer to have work that will be done, and the employee is obligated to do that work personally.  An employment contract will also give the employer control and direction over the work that the employee is obligated to perform.  A written contract doesn’t have to be offered in order for an employee to be hired as long as

  1. There is an offer and acceptance of a job;
  2. Both parties agree to create a legal relationship;
  3. Both parties agree to terms;
  4. Both parties agree to benefits (the employer gets some sort of work product and employee gets benefits).

For the relationship between the employer and employee can legally begin without a written contract. The offer of employment can be made during an interview, but that offer can be withdrawn while a candidate is still deciding if they want the job as long as a period of time has been stipulated before they give a formal answer.  Once both sides verbally agree to a contract, the employer cannot end the contract or change the terms of the contract without following legal procedures or the employer runs the risk of being in breach of contract.

One of the benefits of all employers having an employment contract is to clarify problems that might prove to be contentious later.  Terms of the contract can be, and should be, spelled out in a contract.  For example, a written contract can state whether certain holidays will be expected to be paid, or whether workers can even expect to have those days off.  By including these specifics in a written contract, both parties are less likely to find unhappy surprises about what is expected regarding days off, whether they get paid sick days, and other issues that are discretionary and might vary from one employer to the next.

Employment contracts will be expected to have a section regarding common law.  Common law includes the duties that both the employer and the employee are expected to provide.  The employer’s main expectations will be to provide pay and care.  The employees will mainly be to provide work, be competent, do the job well, be lawful, and act in good faith toward their employer.  Both parties would be expected to treat each other well, co-operate with each other, and keep the work relationship positive unless there is proper cause to change it.

Employment contracts are not just for large businesses.  These contracts can help to protect both parties, no matter how big the company is, and no matter how many employees a company has.

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