Since an employment contract is a contract and may be subject to contractual obligations, you must meet with a lawyer who can establish and/or properly negotiate the contract with your future manager. While this list is not exhaustive, you will be on the road to a viable and responsible contract with your new leader. 3. For cause or without cause termination. Such a provision will clarify expectations and relationships between the parties. The employment contract should define the “cause.” In cases where there is a provision for dismissal without notice for severance pay, the terms of severance pay should be explicitly specified. If an executive is dismissed for this reason or if the employment contract is not renewed at the end of his term of office, a severance pay is not payable. 1. Compensation.
Salary, benefits and other compensation must be set, as the compensation of the manager of your non-profit organization may be subject to an excessive performance review. The IRS imposes penalties for transactions that offer an “excess benefit” in terms of salary and other allowances. This is particularly true where the salary benefit given to the Executive Director is greater than the value of the services provided. When determining the CEO`s compensation, it is customary for board members to consider the salaries of similar directors who manage a non-profit organization of similar size, similar objectives, tasks, geographic area, although this is not a list of factors included. For example, the salary of an executive of a not-for-profit corporation in a rural Midwestern town will be different from that of a large East Coast city, even if the purpose and services offered are the same. In accordance with IRS regulations, the IRS may impose fines on non-profit organizations and board members that allow excessive compensation for its manager. Fees, bonuses, taxable and non-taxable ancillary benefits can be verified in the event of termination. 5. Confidentiality and restitution of ownership clauses. In addition to a confidentiality clause that would protect client and donor lists, you should add a clause requiring the manager to return to the executive all real estate owned by the non-profit employer at the end of the employment period, unless faced with a consequence of non-compliance.
Despite claims to the contrary, both non-profits and their leaders benefit from the existence of an employment contract. The employment contract should clearly establish the terms of the employment relationship and not leave any surprises. The manager`s salary should not be the determining factor in whether or not a contract will be finalized. On the contrary, the desire to minimize and manage risks by both parties and to avoid a bitter and costly end makes an employment contract an intelligent idea. 2. Length of years and frequency of evaluations. The contract between the Board of Directors and the Executive Director is expected to last one year. However, it should continue to allow the Board of Directors to perform its fiduciary duties to the company if the Executive Director does not meet the stated standards. The employment contract should also specify when assessments should take place – for example. B, every year or every two years – and the factors to be taken into account during the evaluation, as well as clear conditions of dismissal.