Drafting Contracts and Employee Hire

An employment contract is a binding agreement between an employer and employee that outlines the terms, conditions, rights, and responsibilities of both parties. Drafting a robust employment contract is essential for protecting the legal interests of both the business and the incoming employee.

A well-written contract tells the employee exactly what is expected of them and clearly sets out the rules for the employer’s workplace. It outlines job duties, salary, benefits, termination conditions, compliance with local laws and regulations, confidentiality agreements, and other critical information regarding their employment.

An effective contract can help prevent costly misunderstandings or severe legal disputes between an employee and an employer down the line. Here are some essential steps for drafting a sound contract and hiring employees, as well as practical tips on how to sail through this process smoothly.

3 Skills Needed in The Hiring Process

Vetting the right candidates for the job and ensuring their smooth transition into your organisation is no easy feat. You will have to be equipped with the right managerial skills if you want to get the absolute best out of your employee hiring process.

Here are the core skills you need to navigate this process successfully:

1. Communication and Negotiation Skills

   Hiring managers must be able to effectively communicate with their candidates, as well as confidently negotiate the final terms and conditions of the job offer. Being able to clearly explain expectations, company culture, and internal policies in a transparent, non-biased manner is key to letting the employee know precisely what is expected of them in their future role.

2. Time Management Skills

   The hiring process can last anywhere from a few days to several arduous weeks. While you would ideally have a steady and efficient timeline for hiring, many external factors can add to the workload and delay the process. As such, managers should set a firm timeline and have contingency plans in place in case things fall behind schedule. Furthermore, the administrative system they set in place must be incredibly efficient to ensure that all tasks, from interviews to contract generation, are completed on time.

3. Decision-Making Skills

   Throughout the recruitment process, you will have to make a handful of highly impactful decisions. This includes deciding which applicants are genuinely the best fit for the job, as well as negotiating and agreeing upon the final financial terms of employment. Having sharp decision-making skills is essential to ensure that these choices reflect the company’s core values and that all parties are satisfied with the outcome.

Hiring Employees: A Step-by-Step Guide in Contract Drafting

1. Provide an Appropriate Title for the Contract

   The very first step in drafting a contract is providing a clear title that accurately describes the terms of the agreement. This is important as it explicitly defines the contract’s purpose for the benefit of the employee. For example, a contract between an employer and a software engineer will likely have the simple title "Software Engineer Employment Contract." It is also standard practice to add a company title or official logo to the top of the contract to establish immediate professional authority.

2. Identify the Relevant Parties

   The next step is to accurately identify the relevant parties—in other words, the employer and the employee. This includes detailing their full legal names, official work email addresses, physical corporate addresses, and other pertaining details that the legal contract will cover. If you are creating a reusable template for your HR department, leave a clearly marked blank space to be filled in later with the title, name, and information of future hires. Encourage these employees to verify their full legal names and personal information to prevent any future payroll disputes.

3. Set Out the Contractual Terms

   The bulk of the contract must strictly set out the conditions of employment. A lot of these terms are governed by regulations that follow local state or national laws, but you can also include bespoke company clauses to ensure the employee’s strict compliance with your internal company policies. Make sure you include all these terms in plain language so the employee has a crystal-clear understanding of their rights and obligations. If you want to be certain that your guidelines abide by local employment laws, consult with a qualified legal professional to thoroughly review your terms before issuing them.

4. Outline the Job Details

   Even though the scope of work may have already been thoroughly established in interviews, you must get everything in writing and provide a clear outline of the job details for your new hires. This includes the official job title and description, core hours of work, rate of pay, and other relevant information regarding the daily tasks expected of them. It is highly beneficial to give a percentage breakdown of duties, responsibilities, and key performance expectations for employees to clearly know their priorities. For instance, a retail worker can be expected to have 25% of their time dedicated to customer service and 75% dedicated to active cashiering duties.

5. Outline the Compensation Scheme

   It is critical to provide a clear, concise, and mathematically accurate description of the salary details upfront to avoid any financial confusion later. This section must include base wages, overtime rates, potential bonuses, health benefits, vacation time accrual, and any other remuneration associated with the position. Include a strict payment schedule, such as monthly or bi-weekly payments, and specify the exact payment date. Also mention how the employee will be reimbursed, whether it's through direct deposit or physical check. If employees are expected to provide their own equipment (like a laptop or vehicle), include precise details of if and how the company will reimburse them for it.

6. Have a Signature Line and Date

   The contract must feature clearly marked signature lines for both parties, alongside a box that states the exact date the agreement has been signed. This is a vital step as it legally binds both parties to the terms set out within the document. It also officially dictates when the employee can start working for the company and how long the employment agreement remains valid.

7. Send the Agreement for Signature

   Once all these drafting steps are completed and verified, you should send the agreement—preferably via a secure email or digital signing platform—to the prospective employee. If the applicant finds the terms agreeable, they can proceed to sign the contract. However, remember that it is still well within the rights of the employee to negotiate or forfeit the terms listed in the contract if they are not comfortable with the final wording.

8. Onboard the New Employee

   Once the employee has returned a fully signed contract and other relevant paperwork, you are ready to properly welcome them to your company. This integration process can vary greatly depending on the size and exact nature of your organization. Generally, the first few weeks involve introducing the employee to their immediate team, providing job-specific training, and thoroughly familiarizing them with company policies. Training them on company-specific software is also a massive part of the onboarding process, and this familiarization phase can take anywhere from a few days to a few months. Finally, the company will have to add the new hire to the official company payroll database to ensure they receive their wages on time.

Further Reading from Skills You Need

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The Skills You Need Guide to Leadership eBooks

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Conclusion

Drafting a thorough, legally sound employment contract is one of the most important administrative tasks a business can undertake. It establishes a strong foundation of trust, clearly communicates professional boundaries, and provides a vital safety net for both the employer and the employee. By taking the time to carefully outline compensation, job responsibilities, and legal obligations—and by seamlessly transitioning the new hire into a structured onboarding program—you set your new employees up for long-term success and drastically reduce the risk of future workplace disputes.