Top 5 Issues in an Employment Agreement

Date: June 11, 2013

The top 5 issues to address in an employment agreement will differ depending on whether you are the employee or the employer and the level of the employee within the organization.  But in general, these are five of the most important issues to include in an employment agreement:

There should be a detailed position description of what is expected of the employee. For a CEO, this includes management duties, number and title of direct reports, fundraising, lobbying, board relations, volunteer relations, and travel.  A vague reference to the position as “described in the association's bylaws” or “general duties of the position” are insufficient to adequately communicate to the employee and the supervisor what is really expected.  The position description may refer to another document such as a strategic plan or annual goals.  The position description should be reviewed and edited each time a contract is renewed or replaced with a new contract.

Compensation is more than just the annual salary.  Compensation includes the base salary, any bonus opportunities and all benefits that the employee will receive.  Sometimes contracts will specify the percentage of base salary increase that the employee can expect to receive each year.  It is important to identify any fringe benefits which will be taxable to the employee. 

The agreement should explain the supervision structure, explaining who the employee reports to and what the expectation is in terms of frequency of reporting and format.  A CEO agreement should specify whether the CEO reports to the entire board, the executive committee, or the board chair/president

The review process to be followed should be briefly explained.  If the employee's performance is to be measured against specified goals or achievements, that should be stated in the agreement along with a statement that the goals or targeted achievements will be revised each year. 

All employment relationships end at some point.  A good employment agreement will cover termination including how both parties may terminate the agreement with and without cause.  It should also state whether the employee will receive the association's typical severance package (if there is one) or if a special severance package has been negotiated. 

Executives should not be shy about discussing the terms of their employment with the hiring committee or board and requesting a written agreement.  Taking the time to fully document the expectations of both parties can save trouble and money down the road.

This article originally appeared in the December 2012 issue of Associations Now, the journal of ASAE: The Center for Association Leadership.