Fast-growing businesses can soon find themselves with hundreds of HR contracts to process each month. How can you stop them getting out of control?
What are HR contracts?
HR contracts broadly refer to the documents that people and talent teams use to create binding employment agreements with staff. They are signed by the employer and employee to make them both legally bound by the terms.
The most common types of HR contract are those formalising employment arrangements, but there are other contracts that would need input or oversight from HR and people teams.
Who is responsible for HR contracts?
Human resources contracts obviously sit with the human resources team. That function might be constituted as a separate people team (for existing employees) and a talent team (for hiring new employees). Together this might be managed as a unified HR department.
HR teams would usually be responsible for issuing contracts to candidates being offered a new job, in consultation with the hiring manager for the particular role. However, in-house legal teams generally have oversight of any contractual terms to which the company is binding itself, so it’s likely that they’ll have some input into HR contracts.
This might be in the form of an approval workflow (see below); or legal teams might create or regularly review the templates upon which employment agreements and other HR contracts are based.
The collaborative nature of HR contracts means it’s important to have a frictionless contract workflow to create and manage them, in order to make sure that no team becomes the bottleneck for hiring new employees.
Types of HR contract
The main group of HR contracts are those documents that establish the employer/employee relationship, setting out the terms of employment. These typically fall into one of several categories:
The exact terminology, and the ground covered by the document itself, varies from country to country, depending on the accepted jargon and custom of that jurisdiction (more on this below).
There is another, broader group of HR contracts, which includes those legal documents, or documents with a legal character, that would usually be managed by or through the HR team. These might include things like:
- Option agreements: distributing share options to employees
- Non-disclosure agreements: potential new hires in discussion with the company may be under NDA to facilitate the conversation
- Variation letters: when changes are made to employment contract terms which need to receive signed acknowledgement (read more about how Deliveroo manages HR contracts)
These documents also benefit from a flexible, collaborative workflow that allows HR and legal teams to provide their input at the right time in the process.
Offer letter vs employment contract
In some jurisdictions, the document that candidates sign to accept a role and bind themselves contractually is called an offer letter. In other jurisdictions, it’s called an employment contract. The exact difference between the two can be minimal, or significant, depending on the country and the organization in question.
Offer letters usually come from the hiring manager, and are personally addressed to the candidate, referring to the selection process they’ve successfully navigated. They might also include the core terms of employment, as well as supplementary information, like an explainer for the company’s share options scheme.
Use this free sample to inspire your offer letters: offer letter template
How to create HR contracts
Contracts that offer jobs to new joiners should be an exciting communication, creating a relationship that’s exciting for both sides. Unfortunately, many companies still miss this opportunity and send out uninspiring offer letters that read more like a legal ass-covering exercise.
In a competitive market for talent, attractive HR contracts could make the difference when it comes to landing a great candidate, or missing out. Here are six tips to make sure your offer letters stand out:
- Use readable language: don’t bamboozle your new starter with dense legal jargon. Make it concise and friendly.
- Nail the details: convey practical information like start dates, line manager name, first payday, length of probation, and so on. Don’t leave unanswered questions that might create doubt as to whether they should sign.
- Make it personal: refer to their particular interview process - what was it about them that impressed you so much?
- Brand it: don’t just send a boilerplate Word document. Make it a brand-compliant document with rich text elements like animation (if your contract editor allows it).
- Don’t ramble: brevity is usually a good thing, and if they worked really hard to keep their CV to two sides, you should probably do the same with their offer letter.
- Automate it: you can make a huge impact on your time-to-sign metrics by setting up a contract workflow with automated templates for offer letters.
Read more about how to write the perfect offer letter.
How to automate HR contracts
Forward-thinking businesses like Deliveroo and Curve have automated their offer letters, by using contract automation to handle these documents entirely in-browser. That means no printing and scanning, and more signing (using electronic signature).
An automated workflow looks like this:
- Set up templates: the HR and legal team define the terms of the master documents from which users will create offer letters and contracts
- Set up approvers: whoever owns the process should have approval rights over contracts being sent out
- Users generate contracts from templates: HR team members can use a natural language Q&A to generate compliant contracts from templates
- Internal collaboration: relevant stakeholders internally add their input
- External negotiation: this isn’t common, or is minimal, on employment contracts, but negotiation can take place in-browser for speed and efficiency
- Electronic signature: contract automation platforms like Juro offer mobile-responsive secure eSignature on any device
- Post-signature management: features like date reminders, analytics, search and so on are available post-signature (see below).
There are lots of benefits of an automated contract workflow for HR teams:
- Faster time-to-hire: HR teams automating contracts can reduce time spent on paperwork by 75 per cent
- Better visibility: visual timelines make it easier to track HR contracts’ progress, and in-browser digital documents end the problem of version control
- Better candidate experience: branded, dynamic digital documents that can be signed on any device offer a better experience to candidates
Check out Juro for HR teams to find out more.
How to manage HR contracts
Contract management covers the parts of the contract lifecycle that take place post-signature. To manage these contracts effectively, it’s important to look for features that do the following:
- Integrate: by integrating contracts with the ATS (i.e. Greenhouse, Workday, Lever) you can make sure data is always in sync
- Provide analytics: monitor the key metrics in your offer letter workflow to see when and why candidates are delayed in signing their contracts
- Set date reminders: use custom date reminders to keep track of key dates that relate to the contracts - renewals, end of probation, end of notice periods, and so on
By moving HR contacts to a browser-native, collaborative automation platform, businesses can make great strides in efficiency and in progress against their hiring metrics.
If you’d like to find out more about ending the headache of paperwork for HR teams, hit the button below to get in touch.