Why Unclear Employment Contracts are Scarier than Dating Taylor Swift
It’s likely that both you and employees feel comfortable that you have signed a contract. But is it clear to both of you what the contract means, or did you just download a template from the Internet without even reading through it?
The horror stories about Taylor Swift’s dating life have been all over the Internet lately. But if you are a business owner, this shouldn’t be the scariest thing for you.
There is one thing in particular that has turned into the boogieman of businesses and employers in particular. Yes, I am talking about employment contracts.
Employees have a lot of power nowadays – employees’ rights information all around, social media and forums where they can share experiences, there are unions; there are professional organizations, and so much more.
For a business to not have top notch employment contracts means risking employment relationships to turn into lawsuits.
The importance of contracts
A contract should be your first thought when you enter into any kind of a business relationship no matter if you hire an employee or a contractor, lease property, receive financing, sell or provide services or buy products or tools.
Contracts, and especially written contracts that are easier to enforce and stronger in court, are a necessity for establishing terms and expectations with all of your partners.
For an employer, an employment contract is an important tool for two main reasons:
- It gives you and your employees clarity regarding the expectations of the job making sure there are less misunderstandings and better productivity
- It reduces your liability as employer in a number of ways and protects your business.
The employment relationship is governed by state and nationwide laws. If employee and employer fail to sign a written contract the rules established in employment law will be the only ones that apply to your employment relationship. And those are in favor of the employee most of the time.
Do you understand your contracts?
If you are reading this, you are smart enough to know that you need employment contracts and you most probably have some. The problem is that not every contract is a good contract. Particularly, not every contract is good for every employment relationship.
A horrible common practice of small businesses is to download an employment contract sample or template from a website or a blog, put in their company and employee information, sign it and go with that. Many times employers see a 10 page document full of complex legal terminology and content that seems without much sense and skim through it without paying much attention.
The trick is that once you sign it, you need to adhere to it. And not knowing what exactly is inside can ruin your business. If there is any kind of a conflict between the employee and employer regarding the terms of the agreement, it will be that contract you didn’t understand that will be referred to. In this situation and employer might be at risk of being saddled with obligations he or she never meant to undertake.
Taking the guesswork out of the contract
However, it’s very unlikely that you never read the contract you offered your employee. The more likely scenario, that we see every day as lawyers, is that employers assume that many things in the agreement are understood without the need to be written.
This is where it gets scary.
If your employee needs to come to work at 9 am every day and be at their workplace until 4 pm, this needs to be in the contract. The fact that you and your new employee discussed the working hours and both agreed doesn’t mean that’s not a necessary clause.
Even if you have discussed everything in detail with your applicant, make sure it’s in the contract too. And then go over the contract, clause by clause with your new employee to make sure you both understand all the clauses in the same way. Leaving things to interpretation is the biggest mistake employers make with contracts.
The simple reason for that is…people tend to forget. And they remember things as they want to remember them. So even if you agreed on 4 pm your employee might feel that their working hours are flexible and decide to leave earlier when there is less work to do.
If you don’t want to live the dating-Taylor-Swift kind of terror with your employment contracts there are two things you need to do:
- Contact your business lawyer and have her review all existing contracts or draft a new template tailored to your job openings or company
- Make sure that you spend a few minutes with each new employee to go through the clauses in the contract and make sure that you both have the same understanding of each clause.
This is all you need to do to have clear and reliable employment contracts that will serve your business and your employees in the best way possible.
We will be happy to make sure that there are no Taylor-Swift-style mistakes or un-clarity in your contracts! Just take a look at our legal packages for small businesses here to choose the option that’s best for you.