How to Write a Retroactive Employment Contract

by Faizah Imani

Whenever your business hires a new employee, an employment contract is signed. Generally, this contract is signed prior to the employee's first day of work. However, some occasions require a retroactive contract. An example is when an employee starts off as a volunteer and is promoted to paid status. The retroactive employment contract is like any other. It also includes a clause stating whether or not the employee is paid retroactively for the services provided prior to his promotion.

1. Specify the name of the parties bound by the contract, including the employer's name -- the company name -- and the name of the employee.

2. Include a statement indicating that the employment contract is retroactive to a specific date. Document the retroactive date in the contract.

3. Write a short statement mentioning the fact that the document is an employment contract.

4. State the payment terms of the employment contract, including the agreed upon pay rate and frequency. Mention whether the employee is full time, part time or an independent contractor.

5. Document the employee's rights and the company's rights. If you want the liberty to terminate the employee at any time and for any reason, or if you want the employee to have the liberty to quit at any time and for any reason, include an “At Will” clause in your contract. An example at will clause reads, "Employee understands and agrees that employment is not guaranteed. The company, as well as the employee, reserves the right to terminate employment at any time, without cause or notice."

6. Disclose whether the employee receives retroactive pay upon signing the contract. If the company pays him retroactively, document the rate he can expect to be paid for each hour worked. Alternatively, include a lump sum figure the employer intends to pay the employee.

7. Sign and date the contract using the current date, not the retroactive date. Require the employee to sign and date the contract. Place a copy of the signed and dated contract into the employee's file.

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