08-08-2025
12 Factors To Consider When Overseeing Employment Contracts
For HR leaders and managers, employment contracts and agreements are critical tools for setting expectations, protecting the organization and establishing trust with new hires. But as laws evolve, roles shift and new technologies emerge, it's not always straightforward to create documents that are both compliant and future-ready.
From compliance with local regulations to the clarity of contract language, there are several factors that can shape how effective and sustainable an employment contract really is. To help HR teams best support their people and their organizations, the members of Forbes Human Resources Council share 12 considerations to keep in mind when drafting and managing employment agreements.
1. The Feasibility Of Contractual Obligations
Do not overcommit the organization to contractual obligations that may become unsustainable in the future. Take, for example, promised benefits that ultimately could not be delivered due to medical underwriting restrictions. Another example is offering 'golden handcuffs' that could complicate matters if the organization needs to raise capital, sell the company or end the employment relationship. - Richard Polak, American Benefits Council
2. Compliance With Local Labor Laws
Ensure that the contract complies with local labor laws for that particular area. Labor laws vary not only across different states, but can also vary greatly across different countries. Take the time to fully educate yourself on the specific local labor guidelines before anything is sent to the candidate. It could save you from substantial employment issues at a later time. - Janet Vardeman, Avanade
3. Clarity For All Parties
One word: clarity. It's imperative that both parties fully understand the terms, expectations and benefits. Clear agreements avoid misunderstandings and help build trust from the start. This helps in setting the tone for a strong working relationship. - Sourabh Deorah,
4. Alignment With Pay Transparency Directives
HR leaders employing within the EU must ensure their employment contracts comply with the EU Pay Transparency Directive—effective June 2026—by avoiding clauses that restrict employees from discussing their pay. Pay secrecy clauses or confidentiality of pay clauses are now prohibited, as transparency is key to identifying and addressing pay gaps and ensuring equal pay for equal work. - Hayley Bakker, beqom
5. The Human Impact Of Promises
Every word in a contract represents a promise—and people remember when those promises are broken. HR leaders must balance legal precision with human impact. Contracts aren't just documents; they're commitments that shape trust, safety and the employee experience from day one. Don't just protect the company—protect the relationship. - Nicole Cable, Blue Zones Health
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6. The Need For Compliance Reviews
In a rapidly evolving legislative climate, employment contracts and agreements will need to be reviewed with compliance in mind every single time an offer is extended, regardless of size or location. Taking the precaution protects the organization and the employee. It's good business sense. - Caitlin MacGregor, Plum
7. Clearly Outlined Terms, Conditions And Obligations
The first rule is always to consider that an employment contract is an important agreement between an employer and an employee; therefore, outlining terms and conditions clearly and comprehensively is crucial. Secondly, it serves as a strong legal protection for both parties; therefore, it is essential to outline the obligations properly. Finally, ensure it's within the legal framework. - Dr. Nara Ringrose, Cyclife Aquila Nuclear
8. Current Realities And Future Strategy
Context matters—and so does direction. Contracts created during uncertainty, business transformations or restructuring often solve for now but miss the bigger picture. Align terms with both current realities and future strategy. Misaligned clauses, like equity, severance or remote work, can create costly friction later. Partner with legal, but lead with a business lens focused on now and next. - Nicole Brown, Ask Nikki HR
9. Alignment Of Legal Precision With Cultural Transparency
Clarity is everything. Vague language around expectations, role scope or termination terms creates confusion and risk. HR leaders must ensure contracts reflect current realities, not outdated templates. Align legal precision with cultural transparency so what's written matches how people actually work, grow and exit. Contracts should build trust, not just compliance. - Apryl Evans, USA for UNHCR
10. Consistency Across Jurisdictions
A key aspect is clarity and consistency across jurisdictions. Especially when working globally, employment laws can vary dramatically. Ensuring that contracts are compliant, unambiguous and aligned with both local regulations and company guidelines helps to prevent cost-intensive legal disputes and protects both employer and employee. - Daniel Salamon, DS Leadership Advisory
11. Flexibility For Role And Organizational Change
Future-proof the contract and also provide current flexibility by setting out the expectation for organization and role change within the contract. It is expected that the candidate will evolve with organizational needs. Viewing the contractual agreement from immediate need to future need ensures it does not become a static and outdated agreement that loses value over time. - Angela O'Donovan, UCC
12. Permissions For Digital Agents
As agentic AI continues to build its presence within the workforce, HR leaders must begin defining access and accountability just as they would with human contractors or employees. Employment agreements may soon include digital agent permissions: what systems they access, what actions they take and how they're governed. Without clear "agent access profiles," autonomy can become risk, not leverage. - Dr. Timothy J. Giardino,
