How to Be Protected From Breaches in Employment Contracts

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The importance of a contract in any situation that has legal requirements attached to it cannot be understated, like employment. Not only do you want a contract as an employer, but also as an employee. The absence of a strong contract allows for more breaches of the agreement that both parties agreed upon. That’s why it’s important to take the time to understand the elements of an employment contract and get the proper protection for it.

What’s an Employment Contract?

An employment contract details everything that is expected of both the employer and employee from the job description to the termination procedure and everything in between.

Description of the Job

To avoid a misunderstanding, it’s important to be upfront with your employee about their position. A proper description should include but is not limited to:

  • Duties
  • Responsibilities
  • Wage
  • Hours
  • Supervisor
  • Competency
  • Work Environment

Statement of the Payment Process

This can be a major cause for conflict if this process is not properly explained in the agreement. This is because employees have certain expectations when it comes to this procedure like:

  • When they’re getting paid: This refers to the schedule of payments like daily, weekly, bi-weekly, or monthly. 
  • What they’re getting paid: Depending on the job this could mean hourly wage, salary, or commission.
  • How they’re receiving it: Many companies offer direct-deposit, while others pay through cash, payroll cards, or paychecks.

Outline of the Benefits

Benefits should always be stated clearly to avoid any potential issues. This includes vacation time, paid leave, sick time, retirement plans, and insurance coverages. If your business supports it, make sure to state how much the company and employee will contribute to a 401k or insurance plan.

Detailed Termination Procedure

In the event of an employee being fired, a contract detailing the termination procedure will help prevent breaches. Contracts should also state the length of time expected for employment and a non-compete agreement. It should also include how an employee can be fired— which can happen in one of two ways:

  • At-will: An employer can terminate a worker without cause and an employee can leave a job without one.
  • With reason: Employees can only be terminated or leave a job with good reason.

Speak with an Attorney

When handling employment contracts, it’s essential that you contact an attorney. While employers need an attorney to draft a contract, employees may need one so they’re aware of their rights. In the event of a discord, attorneys will be able to find the proper solution according to the federal and state laws involved.

Protect Yourself with the Right Insurance

Not having the proper business insurance can leave your company liable to lawsuits and costs. In the event of a breach in contract, there are two types of insurance policies that can prevent you and your company from any further damages.

Professional Liability Insurance (PLI)

This policy is used by businesses when there is a:

  • Failure to finish work
  • Work with errors
  • Lack of payment

Employee Practices Liability Insurance (EPLI)

The EPLI policy covers breaches in the employer to employee agreements. This includes:

  • Sexual harassment
  • Illegitimate termination
  • Violation of privacy
  • Abusing benefits

Now that you know the core features of an employment contract, you must protect yourself with the right insurance. Working with an insurance agency on employee practices can help make sure you’re protected, and you and your employees are on the same page. Be sure to contact the TJ Woods Insurance Agency so we can direct you towards the best insurance suited for your needs.