Employee HiringLabor LawsStaff Education

3 Terms You Must Include in Your Employment Agreement

Employment agreements are one of the most overlooked aspects of owning a restaurant, but they are also one of the most important pieces of your business.

After all, a good employment agreement seamlessly lays out the rights, responsibilities, compensation, and restrictions for your employees. It communicates exactly what you expect from your employees and tells them what they can expect from you as well.

It’s a good idea to have your senior crew members—bar manager, general manager, and chef—sign an employment agreement because it provides legal protection for your proprietary information.

Before you hire or promote your company’s next leader, here are five terms you must include in their employment agreement.

Outline of Specific Responsibilities and Duties

Specifically outlining an employee’s job description and duties is something you can’t afford to overlook in your employment agreement. Without it, you are setting yourself up for a future of arguments over job duties, responsibilities, and possibly compensation.

This list of duties and responsibilities doesn’t have to be comprehensive. In fact, it’s better that it’s not. You can include clauses like “…and other duties as assigned by the [insert leadership role]” in order to not limit the scope of your employee’s duties.

However, be sure to cover all the major bases. If you’re bringing on a new executive chef, include terms such as “responsible for overseeing the operations of the kitchen, including, but not limited to, prep work, daily/nightly cleaning, etc.”

Clarify Ownership of Recipes

If you brought a treasure trove of recipes with you when you opened your restaurant, why not take every precaution to protect them?

Even if you allow your executive chef to determine the culinary course of the menu (which you should!), that doesn’t give your chef complete ownership of your recipes. According to trademark lawyer Andrew Wells, the easiest way to avoid going into a copyright/trademark dispute is to list an ownership exception in the employment agreement. That will give you legal backing, if needed.

You should also consider recording your recipes on a tangible medium—legal jargon for paper. This gives you the ability to argue that your chef didn’t invent a disputed recipe, if you wind up in that kerfuffle.

Arbitration Agreement

Arbitration is not very popular among employees because the process is speedy, and oftentimes doesn’t require employers to follow federal rules of evidence.  Furthermore, the process can be completed in a matter of hours as compared to a regular trial, which can lead to the feeling that the proceeding is “incomplete”.

However, arbitration is a great way for employers to avoid the costly expense of being dragged in front of a judge a jury. The quick-hitting nature of arbitration usually allows owners or managers to show up for court in the morning and be back at the restaurant for a shift in the afternoon. These hearings are also held outside of public view, which can help business owners avoid a damaging public relations fiasco if they end in a dispute with an employee.  Arbitration is also a great way to avoid costly class-action lawsuits, which can ruin a business entirely.

However, owners should be careful about adding arbitration agreements into their employment agreements. Make sure it fits with the culture you are building. Otherwise you may lose as many great employees as you hire, if not more. You should also be sure to check with a lawyer who is familiar with the evolving standards regarding arbitration. This will ensure the language in your agreement exactly matches your intent.


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