Why Have an Employment Agreement?

When an employee embarks on a new job opportunity, the employer will usually have the employee sign an employment agreement. You may have asked yourself who benefits from this arrangement, and if it is necessary in the first place.

Employment agreements are crucial documents that outline the terms and conditions of employment and sets out employee and employer expectations and obligations. Therefore It should clearly define the rights and responsibilities of the employee and employer, with the purpose of establishing a productive and harmonious work environment.

A well-written employment agreement outlines the essential aspects of the employment relationship. This includes identifying the parties involved, specifying payment terms, outlining working hours and leave entitlements, and establishing termination rights.

While covering fundamental aspects of employment, an employment agreement can also be tailored to include provisions that offer additional benefits to the employer. It can address specifics such as the employer’s identity, commencement date, location of work, reporting structure, remuneration, and notice period for termination.

The following are some other important clauses that should be included in an employment agreement:

Intellectual property rights

In many industries an intellectual property rights clause essential as it clarifies ownership of intellectual property created during employment. Therefore employers retain rights to innovations developed by employees.

Restraint of trade

A restraint of trade clause in an employment agreement is also essential for employers as it can protect their business interests by stopping former employees from engaging in activities that could harm the company, such as competing with the business, soliciting existing clients and employees, or disclosing confidential information to third parties.

Clearly written restraint clauses provide clarity and certainty for both parties regarding an employee’s post-employment obligations. Thus reducing the likelihood of disputes arising, and deterring employees from engaging in such behaviour which may undermine the employer’s business interests.

Confidentiality

Employers should also consider including a confidentiality clause in their employment agreement, as it can be relied on to protect the employer’s confidential information and trade secrets that are disclosed to their employees in the course of employment. In effect, this clause will outline expectations regarding the handling of confidential information and clearly sets out any boundaries and consequences for breaches.

Conclusion

Employment agreements are essential in establishing a clear and mutually beneficial employer-employee relationship. By clearly setting out employee and employer expectations and obligations, they provide transparency, minimise disputes, and establish a solid foundation for a productive and harmonious work environment.