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Employment Contract Cost

How Much Does an Employment Contract Cost?

low costLow: Do-It-Yourself Samples Available Freeaverage costMedium: Simple Forms Can Be Customized Online for $10-$50+high costHigh: Attorneys Can Tailor Forms for $100-$1,000+
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Most employees work "at will,"[1] meaning the employer can legally fire them at any time, without giving a specific cause. An employment contract often limits the employer's ability to fire the employee, but can also limit the employee's ability to leave with only a few weeks' notice or to use confidential company information to compete against the company. An employment contract can outline the severance package an employee will receive, and under what circumstances. It's kind of like a prenuptial agreement for a business relationship in that it spells out what each party can expect, especially if things turn sour.

Typical costs:

  • It's relatively easy to create a document yourself. Services such as or[2] provide online forms that can be adapted to your needs for $10-$50 or more, depending on the level of service/advice provided.
  • If you want a contract tailored to your specific situation and anticipating potential legal issues, most attorneys charge $100-$300 or more an hour. After meeting with you and hearing the details of your circumstances, a lawyer might quote a flat fee for creating a basic employment contract, usually anywhere from $100-$1,000. On an hourly rate, a simple, straightforward employment agreement can be drawn up with one or two hours of legal time, or $100-$600; more complicated situations may require 3-4 hours of legal work, for $300-$1,200. That's for drawing up the contract, not doing the actual negotiating.
  • If you have your lawyer also handle the negotiations for you, it could take more time and cost more. Remember that your attorney will have to talk with you about what you want, talk with the other party, talk with you again about the other party's proposals, then get back to the other party with your response. A negotiation that might take you about 15 minutes in direct conversation with the other party could take an hour of your attorney's time.
  • Having an attorney review an employment contract proposed by the other party and then suggest changes could take an hour or less, or anywhere from $50-$300 or more depending on how much work is involved and your attorney's hourly rate. Again, having your attorney negotiate any changes to the proposed agreement directly with the other party's attorney could raise the cost, depending on the time involved.
Related articles: Business Sale Attorney, Non-Disclosure Agreement

What should be included:
  • An employment contract typically includes the terms of employment (compensation/salary, sick leave, vacation, etc.), details about the employee's responsibilities and reporting relationships, specifics about any stock options or ownership interests given to the employee, and other agreements, such as a potential severance package. lists 10 provisions[3] that might be included in an employment contract.
  • describes how to negotiate from the employee's perspective[4] and looks at the process from the employer's point of view[5] .
  • If you're going to be drawing up more than one employment contract, have an attorney help you create a template tailored to your company's needs and policies, so you can reuse the form many times, with only minor changes for each specific employee, rather than paying your attorney to create a new document each time.
  • Some people cut costs and still get legal guidance by using a free sample employment contract to create their own document, then have an attorney review it. This works only if you start with a good sample contract.
Shopping for an employment contract:
  • In business law, attorneys who handle legal disputes are litigators while those who handle contracts, securities and other business matters are transactional lawyers. An Illinois attorney provides tips for selecting a business lawyer[6] .
  • Referrals to employment contract attorneys are available from[7] and[8] .
  • Your attorney should provide you with a written fee agreement; be sure you understand what is or is not included, and all the potential costs.
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