- within Employment and HR topic(s)
- with Senior Company Executives, HR and Finance and Tax Executives
- with readers working within the Accounting & Consultancy, Consumer Industries and Healthcare industries
Contracts are the foundation of every business relationship and that includes the one between you and your employees. Whether you're hiring your first staff member or growing your team, having a well-drafted employment contract sets expectations, protects your organization, and ensures compliance with employment laws.
If you're a new or growing business, here's what to include when drafting an employment contract that works for both you and your team.
1. Employee Classification
Before anything else, it's essential to define the nature of the employment relationship.
Is this a full-time employee, a part-time hire, or a contractor?
Specifying this in the contract prevents confusion about job expectations, pay structure, and legal entitlements. Misclassifying employees can lead to disputes or even costly legal action, something every business wants to avoid.
2. Job Title and Responsibilities
Your employment contract should clearly outline why you're hiring the person and what you expect them to do.
Include:
- The employee's job title
- A general description of their duties
- Details about performance reviews or appraisal processes
This doesn't have to be a long list — clarity is more important than length. A well-defined role ensures mutual understanding from day one.
3. Work Hours and Schedule
Every employment contract should detail expected work hours, schedule, and start date.
For full-time employees, outline the number of hours and days per week they'll work. If your organization offers flexibility, such as remote work or flex hours, it's best to include that too. Doing so reduces future misunderstandings and sets clear expectations around work-life balance.
4. Salary and Benefits
Compensation is often the most scrutinized part of any contract — and for good reason.
Be sure to specify:
- The salary amount and payment frequency (weekly, bi-weekly, or monthly)
- Any bonuses, incentives, or commissions
- Benefits such as health insurance, retirement contributions, or wellness programs
Transparency here builds trust and ensures your pay structure aligns with employment standards.
5. Paid and Sick Leave Policy
Time off is just as important as time on. Your employment contract should outline your organization's paid time off (PTO) and sick leave policies.
This section should explain:
- How many paid and sick days are offered
- Any restrictions or conditions
- How unused leave is handled
Including these details helps employees understand their entitlements and your expectations around attendance.
6. Confidentiality and Privacy Terms
Protecting your business's sensitive information is critical.
You can include a confidentiality clause (or even a separate non-disclosure agreement) directly in the employment contract. It should clearly state what information must remain private and the consequences of breaching those terms — covering trade secrets, intellectual property, client lists, and internal processes.
For industries where client trust and proprietary knowledge are key, this section is non-negotiable.
7. Termination and Notice Period
Finally, your contract should address how and when the employment relationship can end.
This includes:
- The notice period required by either party
- The grounds for termination (such as misconduct, performance issues, or restructuring)
- An ypost-employment confidentiality or non-compete expectations
Clarity here protects both the employer and the employee from potential disputes down the road.
Why Legal Guidance Matters
While these are the core elements of an employment contract, every business is unique. Factors such as industry standards, compensation models, and provincial employment laws can affect how your contract should be written.
That's why it's wise to consult with an employment lawyer — someone who understands the nuances of employment law and can help you create a contract that meets both your operational needs and legal obligations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]