Imagine that you have spent days or perhaps weeks looking for the perfect candidate to hire. Now that you have finally found your top talent, it is now time to draft an executive employment agreement. Before entering a committed relationship, the parties involved should set agreements. This rule applies to any kind of relationship, may it be in a relationship between friends, an intimate relationship, or even in an employee-employer relationship. Before an employee becomes part of the company, the employee needs to review and sign an executive employment agreement with the company first.
An executive employment agreement is a formal contract between an employee and a company, that contains their expectations and obligations with each other. More specifically, this contract defines the fundamentals of the employee’s relationship with the company, which includes the compensation, termination, benefits, tax considerations, duties and other important provisions. This employment contract will help both the parties of the relationship to avoid being abused and also to minimize future conflicts.
An employment agreement form should be drafted carefully, for the reason that, in case of future disputes this agreement will serve as a protection to either the employee or the employer. The terms in your contract should be clear so that it could be understood by both parties. Every provision in an executive contract agreement should be done carefully. Here are some guidelines on how to create a well-drafted employment agreement.
Before diving into the complicated parts of the agreement, start by giving it a title. It doesn’t need to be complex, a general and simple title would do. After writing your title, the next thing you should do is to state the parties. The parties in the agreement would be your company and the employee. It should also be noted that if your company is operating in multiple locations it is important to specify the location of your business.
In your agreement form you should list the benefits and the company rules that the employee should adhere to. There are benefits laid out by the government, these benefits include health insurance, dental and vision insurance, life insurance, vacation pay and plenty of other things. It is essential to list these benefits so that the executive employee would know what government benefits can he or she enjoy.Don’t forget to explain how the employee will qualify for each benefit. Aside from that, you should also include the job responsibilities, dress code, work hours, the do’s and dont’s in your company and other important terms.
For the employee to be able to do what you hired him or her to do, you should outline the scope of his duties. In this part it is recommended to be as specific as a possible. It would be best to assign percentages to the duties. Is the employee expected to answer calls 10% of the time? Is the employee supposed to file a report 20% of the time? Specify it in your agreement to let the employee know what the company is really asking from him or her, and also to avoid surprises on behalf of the employee.
The compensation plan should be discussed with clarity to avoid confusion regarding the employee’s salary and allowance. In your executive agreement form you should explain how the employee will be compensated. Will it be hourly, salary or on commision? You should also specify how you calculate overtime and how you determine the holiday pay. Note that it is also important to state how the executive employee will be paid. State whether it will be through check, direct deposit, Bitcoin, Paypal or through other means.
There are components that you should never leave behind in drafting an executive employment agreement form. Components such as the type of employment, severability, dispute process, length of the contract, effective date, termination, notice, and the applicable law. These are the things that a standard contract could never go without, so make sure to insert it and clarify it properly on your agreement form. Also, include a signature line and the date in your contract.
This agreement is legally binding, so go over it multiple times and make sure that there are no errors. Redraft if it is needed. Don’t rush yourself in drafting the form, give yourself time. After drafting the agreement it is recommended to let an attorney review the contract you drafted.
The first one is the compensation. Clarify if your salary will increase as your time in the company increases. Confirm if the company can reduce your salary, and if so, for what reasons. You should also get details about work bonuses. The second one is the equity grant. Make certain to know everything about the equity grant offered by the company. The last one is your employee position. It is important to know what responsibilities comes with the position that you are hired for. If you’re unsure about something, have it documented in the agreement.
A job contract is legally binding, so if you changed your mind after signing it, it would be a difficult situation for you. If you ever decide to cancel the contract, read it carefully, and confirm if there are legal repercussions if you decide to cancel the contract. If your departure can cause great damages or loss to the company, your employer can sue you for a breach of contract
Yes, a CEO also needs to sign a job contract. Their contracts are far more complex and could reach up to 20 pages. CEO contracts often include the employment contract, stock options, compensation, and also the code of conduct. There could also be clauses in the contract about intellectual property rights and also about information security.
In drafting the agreement form, you should be both pro-company and pro-employer. A well-drafted executive employment agreement could end up benefiting both the company and the employer. Legally bind your top talent in a contract agreement that the employee himself or herself wouldn’t want to break free from.