Onboarding has always been key to getting new employees settled into a company. It's that first step that helps new hires connect with the organization and sets the tone for their career. This process, often called organizational socialization, helps new employees fit into the company culture and align with its goals.
One important aspect of onboarding that's become even more relevant today is the employee agreement. Let's take a look at why this contract is so crucial to the onboarding process.
What Are Employee Agreements?
An employee agreement is basically a contract between you and the new person joining your team, whether they're a regular employee, freelancer, independent contractor, or subcontractor. It sets the stage for your working relationship, clearly outlining everyone's roles. This helps keep things transparent and ensures everyone is on the same page, making the whole setup feel more secure.
An employment agreement can also be called the following terms:
- Offer letter
- Offer of employment
- Employment contract.
- Contract of employment.
- Employee contract.
- Job contract.
The standard employee contract covers various elements, such as:
- Salary: This section of the employee contract will outline the agreed-upon salary, including wages and commission. It should also clarify any opportunities for advancement, potential raises, and how often performance evaluations will occur.
- Benefits: This section covers all the benefits employees will receive, such as insurance plans, holidays, and vacation days. Everything should be clearly outlined in the contract. Understanding these benefits helps employees appreciate the full value of their employment package.
- Work Responsibilities: This section specifies the job descriptions, including the employee’s title and what they’ll be responsible for in the company. Both you and the employee can discuss and negotiate these responsibilities to ensure everyone’s on the same page.
- Employment Duration: This part of the document outlines how long the employment will last—whether it’s permanent, temporary, or on a contract basis. It helps both you and the employee set clear expectations and plan accordingly.
- Schedule: This section covers the details about the employee’s work hours and days. This includes start and end times, daily and weekly hours, and the days they’re expected to work. It may also cover scheduling flexibility, overtime, and break policies to ensure everyone is clear on time commitments.
- Termination Conditions: This part explains how and when the employment can end. It covers the notice periods required if either the employer or employee wants to end the job, reasons for immediate termination, and any conditions for leaving with or without cause. It also includes what needs to be done with company property, when the final paycheck will be given, and how employee benefits will be handled. This helps both sides understand the rules and steps if the job ends.
Other Important Terms in Employee Agreements
In addition to the standard elements of an employee contract, there are several other terms that companies often include to address specific needs and protect their interests. Some of these additional terms include:
- Confidentiality and Non-Disclosure
- Non-Compete and Non-Solicitation
- Health and Safety Policies
- Company Property
- Remote Work Policies
Employers may choose to include these additional terms in the onboarding contract if they are relevant to their company. By doing so, they ensure clarity and protection for both the employer and the employee regarding these specific aspects of the working relationship.
Why are Employee Agreements Important?
Employee agreements are a valuable part of the onboarding process for many reasons, a few of the most applicable are outlined below:
- They clearly define the terms of the job, making sure both the employee and employer understand what is expected.
- If there’s any uncertainty about workplace issues, the agreement and company guidelines can offer guidance and help find solutions, depending on how clearly the agreement is written.
Types of Employee Agreements
Just as there are various types of employees and employers, not all employee agreements are created equal. They can be tailored to fit the unique needs of each company and employee. Some common types of employee agreements include:
1. At-Will Employment Agreement
- This is the most common type of employee agreement issued.
- Under an at-will agreement, an employee can be terminated or quit without notice.
- The employer cannot fire an employee for protected reasons. Retaliation, discrimination, and other protected classes will prevent an employee from being fired.
2. Written Employment Agreement
- This is more detailed than the at-will variety of agreements.
- As an employer, you will generally fix the duration of written employment contracts.
- This type of contract will detail termination terms, meaning employees can only be fired if they violate their contracts.
3. Oral Employment Agreement
- Employment can either be at-will or based on specific terms.
- These contracts are also legally binding, but proving them in the case of a breach can be difficult.
- If this type of contract is breached, the employer or employee can enforce the agreement using any documentation surrounding the circumstances to serve as evidence.
4. Implied Oral Agreements
- These contracts have no formal documentation and can combine both oral and written statements.
- Courts often consider an employee’s performance and the length of time in which the employee worked when evaluating implied oral contracts.
Advantages & Disadvantages of Employee Agreements
Advantages:
- Clarity and Understanding: Employee agreements provide clear definitions and expectations for both parties, ensuring there is a mutual understanding of the terms of employment. This can help prevent misunderstandings and conflicts down the road.
- Legal Protection: By detailing the rights and obligations of both the employee and the employer, these agreements offer legal protection. In cases of disputes, the contract serves as a reference point for resolution.
- Consistency: Employee agreements help maintain consistency in managing different employees, ensuring that everyone is subject to the same rules and conditions.
- Professionalism: Having a formal agreement in place underscores the professionalism and seriousness of the employer-employee relationship.
Disadvantages:
- Rigidity: While providing clear terms, employee agreements can sometimes be restrictive. This can be a disadvantage if the needs or responsibilities of either party change.
- Time-Consuming: Creating an effective employee agreement requires careful consideration and time. This can be a disadvantage for employers who have limited resources or need quick onboarding.
- Potential Legal Challenges: Employee agreements must comply with employment laws, and any violation could result in legal challenges and penalties for the employer. This makes it essential to have a legal professional review and approve the agreement before implementing it.
Bottom Line: Employee Agreements Are Essential
Employee agreement is indispensable for a successful onboarding process. It guides your new hires and makes it easy for them to adjust to their role, setting up a well-functioning workplace. This contract brings clarity, legal protection, and consistency, helping kick off a positive employer-employee relationship right from the start.
It is essential for employers to carefully consider and create a well-crafted employee agreement that addresses their specific needs and protects their interests. Overall, by including an employee agreement as a standard part of the onboarding process, companies can promote transparency and foster a healthy work environment.
