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When bringing on a new hire, you want to make sure you’re covering all your bases.

The human resource (HR) contract you send them to finalize the agreement needs to include all the details, conditions, and obligations of both parties. Yet, this process can quickly grow unruly if you have too many contracts to handle or have outdated contract management software. 

Luckily, we're digging into it all here. 

In this article, we’ll look at the ins and outs of HR contract management. Here’s what we’ll cover:

  • What human resource contracts are
  • The different types of HR contracts
  • How to create clear and concise HR contracts
  • How the right tool can streamline the entire contracting process

Let’s get started.

What are HR contracts?

Human resource contracts are agreements between workers and their employers that outline the terms of a working relationship. It clearly documents the obligations required of each party to fulfill the agreement. 

The exact content of the HR contract may vary depending on the signing individual’s employment status, however, they usually include the following pieces of information: 

  • Job title
  • Job description
  • Start date
  • Duration of engagement
  • Non-compete clause
  • Confidentiality agreement
  • Dispute resolutions
  • Employee compensation and benefits

All the terms and clauses covered within an HR agreement aim to succinctly describe expectations. You’ll often see how the employee and employers will fulfill their end of the bargain. You’ll also find confidentiality clauses or dispute processes. Some employees also sign a confidentiality or non-disclosure agreement (NDA) as part of the hiring process. The goal is to remove questions and avoid risks should any dispute arise. 

“Different leaders will have different views on how to determine risk, and understanding that risk tolerance is super important to your success. If you work for a growing company, for example, your general counsel and your business leaders may be more open to taking on more calculated risks.”

~ Katayoon Tayebi, Associate General Counsel, FIGS
Accelerating Your Career with In-house Counsel

What types of HR contracts are there?

You might create and manage different contract types depending on the nature of the employment. It’s important to know which style of contract is best suited to your needs. Here are some of the more common types of HR contracts. 

Also read: Contract Repository: Everything you need to know
  • Permanent employment contracts: Permanent employee contracts are the ones you’ve probably encountered the most. These contracts apply to regular full-time or part-time employees. It outlines work expectations for a fixed hourly rate or salary. 
  • Fixed-term contracts: Fixed-term contracts have a set end date. You’ll commonly see them for internships, temporary roles, or covering absent employees. Employees working under these contracts have the same rights and benefits as permanent employees. 
  • Casual employment contracts: Casual employment contracts entail a commitment to work without the promise of a number of working hours. Workers under these contracts usually complete projects as needed by the employer. The worker remains employed even if work isn’t available.
  • Zero-hour worker contracts: With zero-hour worker contracts, employers have no obligation to give workers a minimum amount of work. Instead, the employee is given work as needed by the employing company. They receive some statutory rights, like minimum wage. 
  • Consultancy agreements: Consultancy agreements are most commonly used for independent contractors, consultants, and freelancers. These contracts are agreed upon by the self-employed individual and the contracting company. The agreement sets expectations for how the engagement will work, rates, how the worker gets paid, and any other applicable conditions of the engagement. 
Also read: Executed Contracts: Definitions, Types, & How to Use Them

5 Tips for creating HR contracts

5 tips for creating HR contracts

#1 Use clear language

In all contracts, especially those outlining the conditions of employment, you want the language to be as clear as possible. There should be no discrepancies in the contract’s terms or clauses. Explicit and unambiguous contract terms help mitigate potential future risks. 

When you review the contract before sending it to the signer, ensure there are no areas where questions could arise. Avoid using dense legal jargon, but stick to traditional contract language as much as possible. Consider providing definitions for those legal terms for the signer. You want to ensure there is only one way to interpret the contract’s terms and clauses. 

Also read: Minimizing Legal Liabilities With Clickthrough Agreements

#2 Make sure all the details are accurate

You want to avoid finalizing a contract with incorrect information. The spelling of the company and signer’s names, effective dates, role requirements, and everything in between should be fact-checked before sending the contract. 

Here is your opportunity to make sure all parts of the agreement align with the discussions between employer and employee leading up to contract finalization. Invite the signer to review the agreement’s contents and ask any questions. 

#3 Personalize the agreement

Personalizing a contract can make a new hire feel welcome, no matter how large your company or the role you’re hiring for. Make sure to include the basics—add information specific to the role and address the new hire by name at the start of the contract.

“When I've identified a candidate I really, really like and want to hire, I like to tell that candidate, ‘You're great. I'd love to meet you for a coffee. Let's sit down and see how we work.’ I tell them a little bit about myself and ask them about what they like. I think that's a really helpful last step in hiring before making a formal offer.”

~ Adam Glick, ex-Head of Legal, Intercom
Cultivating Meaningful Connections for In-House Legal Success

A personalized agreement provides more protection for the employer if a dispute arises. It clearly lays out expectations, liabilities, dispute resolutions, and more that are specific to the new hire and their role. Generic agreements might be cheaper but cover fewer bases than a tailored contract. Overall, personalized contracts create greater transparency and alignment between employee and employer.

Also read: Contract Management for Small Businesses: The Ultimate Guide

#4 Give employees ample time to review and sign

Most employees will want to review the contract before signing it. Create space to ask questions and give them ample time to review them. Offer to hop on a call to discuss the contract terms and answer a new hire’s questions.

It’s the responsibility of the HR department to see an employment contract through from beginning to end. Set a realistic timeline for contract review by the employee and employer. Usually, a week or five business days is ample time for a new employee to review the document. This also allows time for negotiations and contract modifications. 

#5 Use software to help automate the process

Whether you’re processing two or twenty contracts at once, solid contract lifecycle management (CLM) software can help streamline your workflow. 

A CLM software can capture and store valuable contract data. Frequent contract analysis provides insights into bottlenecks within your contracting process and any specific contract language that creates questions and slows the process. Gathering this information creates opportunities to mitigate risks of contract discrepancies and iterate on your contracting processes. 

“Leveraging a CLM has been key because it has reduced a lot of friction from handoffs between legal and business. Rather than going back and forth over email, Slack, Word, Zoom, DocuSign, and a whole tech stack, the CLM acts as a single source of truth. We have a whole intranet with resources and a legal services request form with 10 different questions so we get all the information upfront and don't have to go back to ask follow up questions.”

~ Jonathan Franz, Head of Legal, Crunchbase
Navigating Economic Turbulence and Thriving in Chaos

You also likely want to scale your operations over time. To do this, you need a contract management tool that can grow with you and streamline the flow of contracts. The best contract management systems automatically alert signers when it’s time to review and approve the contract. It can store large amounts of information and keep all your contracts organized and secure. When these foundations are covered, you can focus on building a large-scale contracting process that grows with your company.

Also read: Mastering HR Contract Management: The Key Lies in CLM Software

Ready to create HR contracts automatically? SpotDraft is the tool for you 

As you create HR contracts, you must have a process to support company growth and agreement accuracy. That’s where you can lean on a reliable contract management tool like SpotDraft. 

SpotDraft is an end-to-end CLM tool equipped with contract templates that streamline the contract creation process. Workflow automation invites the entire contracting process to run itself while contract reporting collects valuable insights. 

Curious to see how SpotDraft can help your HR contract management? Request a demo today.

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