As a small business owner, you have likely invested a great of yourself and your personal resources into your enterprise. Because of this, you may be considering utilizing every tool that could allow you to protect it.
One tool you might be considering is employment contracts. However, before you start having all employees sign contracts, you should think about whether they are actually necessary.
The purpose of employment contracts
To determine whether employment contracts are appropriate, employers should know what they do and what they protect.
An employment contract puts in writing the expectations, responsibilities and details of a specific role. It may also include restrictive covenants, such as a non-compete clause. When parties sign these contracts, they are agreeing to abide by the terms or face penalties.
Generally, these contracts help employers and employees by plainly stating details about the relationship to prevent conflicts and legal disputes.
Who should have one?
Not every person you hire needs or benefits from an employment contract, but there are certain people for whom they can be appropriate. For instance, you might want to have a signed agreement with someone who:
- Has access to proprietary or sensitive company information
- Would be very difficult to replace
- Holds a high-level position within the business
- You want to keep from leaving your company for a competitor
Under these circumstances, a contract can give both parties peace of mind and a clear understanding of the future.
Drafting effective contracts
An employment contract can only be effective if it is valid and enforceable. Thus, you may want to seek legal guidance when drafting one to ensure you cover your bases and remove unlawful or unfair clauses.
If a contract is too broad, contains misrepresentations or has unconscionable terms, parties can contest it. If this happens, courts could cancel the contract or order payment of damages.
Protecting the business you started should be a top priority for any small business owner in Connecticut, and it can look different for everyone. Therefore, it can be crucial to consider your specific needs and situation when determining the tools you put in place.