Employment Agreements: Making them Work for You

An accountant employed a new tax consultant on the eve of the tax season.

The new employee was bright, experienced and well qualified for the position having just completed his degree with distinction.  He seemed just the sort of consultant that he needed to see clients in one of his satellite offices in that town.  The accountant trained him with his other staff, versed him in the tax preparation system which he had developed over his 25 years in the business and bought a license for the packaged software the consultant would need to prepare tax returns.  The new employee installed the software onto his personal laptop by agreement.

It was several weeks later, in his busy time of the year, that the accountant noticed another small ‘laptop-and-desk’ tax office setup in the local shopping centre.  Since he prided himself on his knowledge of the market, the accountant took notice of the pamphlet which advertised a rate significantly lower than his nearby office.  How surprised he was then to discover that the name on the bottom of the pamphlet was his new employee – he was running his own ‘cut-price’ service at an office within 1 km of his employer!

Many employers have spent thousands in recruiting, training and outfitting their staff only to have their expectations not met or worse.  Employers can protect this investment, and the business itself, by requiring all employees to sign an Employment Agreement on commencement of employment.

An Employment Agreement puts all the Employer-Employee standards and obligations into writing.  It contemplates all aspects of the employee’s appointment and should set out clearly what is expected by both parties.  It also has the advantage of placing contractual obligations on the employee to maintain these standards.

Some matters that should be contained in an Employment Agreement include:

Description of Duties

Although obvious, the central issue is what will be expected of the employee.  Failure to include a comprehensive statement may impair an employer’s ability to terminate employment for deficient conduct, whereas a detailed description will make it clear what is expected, as well as reducing conflict in the event that an employee’s performance comes into question.  The hours of work should also be agreed on and clearly defined.

Dress and Professional Standards

A business’ image is one of its most important assets, and it should be adequately protected.  Detail should include the business’ uniform, the manner in which it is to be worn and it’s care and laundry.  If there is no uniform, the required standard of dress and grooming should be stated.

Training and Further Education

Business practices are always changing and our employees “know how” has to keep up.  Expectations that you have of continuing and further education and training can be enforced once they are contained in a contract.  This can help to keep your staff up-to-date and expanding their knowledge skills, without having to coerce them each time you feel it is needed.

Intellectual Property

A number of cases have arisen where the material produced in the course of employment has been claimed by both employer and employee.  In one instance, an employee who invented a foldaway ironing board whilst working for his employer later sued the company for producing a similar design.  He was initially successful and obtained a judgement for $25,000 against his former Employer, but was overturned on appeal due to a legal technicality.

To avoid such claims, and to protect against misuse, the rights to any intellectual property generated by the employee should be addressed conclusively in the Employment Agreement.

Policies on Confidentiality and Restraint

Consider all the clients your employee will meet, the contacts they will make, ‘tricks of the trade,’ and other intimate knowledge they will obtain while in your employ. Restrictions against past employees ‘setting up shop’ and using contacts (or even other staff) that they make in your employ is essential. This and other restrictions on using the confidential information of your business should be personalised to your needs and included in an Employment Agreement to maintain the goodwill of your business.

Conclusion

The accountant from our earlier example was able to confront his wayward employee and an agreement was reached as to how the goodwill and competitiveness of the accountant’s practice could be maintained.  Fortunately for him, the employee’s personal operation could not support him, and so it was in both parties’ interests that the employment should continue.  An Employment Agreement now protects the employer’s business interests and confidential information.

Whatever the setting in which a business operates, an Employment Agreement can assist with clearly defining the scope and duties of an employee.  Employment Agreements Work – because when carefully tailored to Employer’s expectations for their team they create contractual rights for the employer and can help to avoid many of the potential problems and misunderstandings that may arise in employment.

Joe Kafrouni, Legal Practitioner Director, Kafrouni Lawyers

Disclaimer

The information provided by Kafrouni Lawyers is intended to provide general information and is not legal advice or a substitute for it. Business people should always consult their own legal advisors to discuss their particular circumstances. Kafrouni Lawyers makes no warranties or representations regarding the information and exclude any liability which may arise as a result of the use of this information. This information is the copyright of Kafrouni Lawyers.

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