Finding an ideal candidate for a vacant position is an exciting moment. The right marketing professional or salesperson can have a dramatic impact on a company’s profit margins.
However, employees also create liability for organizations. They may not fulfill their professional obligations in some cases. They could engage in misconduct that negatively affects the workplace culture. They might even try to sue the company eventually. Despite feeling optimistic about a new hire, leaders at organizations typically benefit from including protective provisions in employment contracts.
What contract additions can help protect companies when onboarding new talent?
1. Restrictive covenants
Particularly when a new hire may have access to trade secrets, they are in a position to damage the company after they leave their position. Adding restrictive covenants to an employment contract diminishes the likelihood of a worker harming the organization in the future. Non-disclosure agreements can prevent people from sharing non-public information about a company. Non-compete agreements can prevent them from starting a competing company or taking a job with a competitor. Non-solicitation agreements can prevent workers from trying to do business with clients or hiring their co-workers after leaving the company in the future.
2. Limitations on severance packages
C-suite professionals and other well-compensated workers often negotiate terms for severance. If they lose their jobs unexpectedly, severance packages paid by employers can provide them with wages or allow them to retain their benefits for a certain amount of time. Companies can protect themselves from obligations to pay severance when firing a worker for cause. Including provisions in severance agreements that limit or eliminate severance packages when there is proof of worker misconduct or poor job performance can potentially save a company thousands of dollars.
3. Alternative dispute resolution clauses
Sometimes, there are legitimate conflicts between workers and employers. In such cases, employees might want to take legal action against the company. When employment litigation occurs, companies have to absorb the costs of going to court. Details about the matter can often become public record as well. Including clauses that require alternative dispute resolution before litigation may provide a company with an opportunity to limit expenses and prevent bad publicity. Arbitration and mediation are both systems that allow for the successful resolution of employee disputes without involving the courts.
Creating custom employment contracts, especially when filling key vacancies within an organization, can enhance the protection of a business hiring or promoting a professional. Employers with robust contracts have less reason to worry about conflict with their employees and more protection in the event of a dispute.
