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The importance of employment contracts for smaller companies

On Behalf of | Apr 10, 2023 | business law |

An employment contract refers to the understanding of things such as job responsibilities, duration of employment and pay rate between an employer and an employee. Many employers have new hires sign a contract for various reasons when they come on board.

Here are some of the reasons why employment contracts are important for small businesses in Louisiana.

To set expectations for freelancers

Some small businesses hire freelancers to perform some of the work for the company because they offer more flexibility and cost savings over hiring a full-time employee. Freelancers often work for more than one company at a time to make a living. This means that they may be less familiar with a particular company and need to know the company’s specific expectations, which an employer can provide through an employment contract.

To set expectations for other employees

It is also important that regular employees of the business know the company’s expectations when it comes to things such as taking time off. Because smaller businesses have fewer employees, those who work for them need to be especially cognizant of when they take their vacation time.

To protect the employee

Employment contracts offer employees peace of mind that they will receive a certain rate of pay as long as they perform the work required of them. Treating employees well helps to boost the reputation of the small business in the community and encourages employees to remain with the company.

Small business owners who know the benefits of using employment contracts can make an educated decision about whether or not to use one.