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How employment contracts can benefit employers

In California, a wide range of employment issues may be addressed through an employment contract between the company and its workers. According to, a primary advantage is the identifying of an employee's responsibilities and specific job duties. When details about performance expectations are included, they may be used during evaluations and in situations where raises or promotions may be due. Failure to meet standards may also be listed as grounds to end the contract.

An agreement between the company and the worker may or may not include a predetermined end date, but information about ending employment should be included, regardless. How and when either party can terminate employment, and whether severance pay or extended benefits are due, should be defined in this section. This may prevent litigation in circumstances such as unforeseen layoffs, employee misconduct or other events leading to early or unexpected termination.

Findlaw explains that the employment contract should contain details about what the employee can expect from the employer. For example, any benefits offered such as health insurance, vacation leave and retirement should be included.

Another benefit to employers is the protection of a business's trade secrets. For many, a unique service or product can only be offered as long as it remains exclusive to the company. Employees are often necessarily privy to this information, and there is always the risk that someone could leave the company and use it to create a competing business. Through a nondisclosure or confidentiality clause or a noncompete agreement, an employer may be able to ensure that no one will steal proprietary information. This may include client lists and customer contacts.

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