What is a Hiring Contract?

Lori Smith

A hiring contract is a legally binding agreement that outlines the terms of an employee-employer relationship. A mutually beneficial agreement can protect the interests of both parties and limit misunderstandings. It often reiterates the basic job details usually discussed during the interview process, such as performance expectations, responsibilities, salary structure, and any benefits offered by the company. Many times, other provisions are covered as well, which may include corporate policies, issues regarding confidentiality, and sometimes, a non-competition clause.

Terms of employment are outlined in a hiring contract.
Terms of employment are outlined in a hiring contract.

When an individual accepts new employment, sometimes the employer will draft a hiring contract. This usually occurs after the final stage of the interview process. The employee should review the terms of the agreement carefully, because it is generally a legal, enforceable document. Certain limitations of a hiring contract may even remain effective long after the employee leaves the organization.

The terms of the hiring contract are sometimes negotiable.
The terms of the hiring contract are sometimes negotiable.

Ideally, an employer should have an attorney review a hiring contract to make sure that the terms and conditions are enforceable and legal under the laws of the jurisdiction. An employee who is presented with an agreement of this type may also benefit from having his own attorney review the contents of it. It is important for the employee not to sign the document unless he or she completely understands it. Sometimes, the terms are confusing. A hiring contract can be beneficial in many cases, but its existence may also create potential problems or limit certain rights for either party.

Sometimes, the terms of the hiring contract are negotiable. If an employee is presented with a proposed agreement, and he or she is uncomfortable with its conditions, certain revisions may be requested. If the employer agrees with the changes, the contract may be amended so that both parties are satisfied with the terms. Each person should sign the final document and keep his or her original copy in a safe place.

In addition to other important provisions, a hiring contract usually contains a clause concerning issues of dissolution. In other words, it should state how, and under which conditions, either party may be able terminate the employee-employer relationship. For example, a written notice may be required before the relationship can be dissolved, or a severance package may be offered under certain circumstances. In case either party breaches the contract, it should also include an arbitration clause or other provisions as to how disputes may be resolved.

A hiring contract may cover corporate policies.
A hiring contract may cover corporate policies.

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