Halachic and legal contracts/shtaros

When entering into any transaction, it is imperative to stipulate all terms and conditions in a properly formulated contractually binding document. Many Dinai Torah result from insufficient understanding and/or poor facilitation of unsecured contractual agreements. When hiring employees and/or independent contractors the legitimacy and clarity of the contractual documentation is of paramount importance. The Chofetz Chaim in a number of places (e.g., Ahavas Chesed; end of Chapter 10, Sefas Tomim, Chapter 5) exhorts people to draft explicit agreements when hiring workers. The initiation of employment or contractual relationship must be preceded by the following provisions: (a) provision of worker’s duties and responsibilities (b) description of any type of compensation that the worker will receive (e.g., salary, bonus, benefits, equity awards, etc.). The Chofetz Chaim states further that a reason that it is unwise for the employer to leave issues unaddressed is that the employer may underpay as a result of the lack of explicit terms, and will thereby violate a number of negative commandments of the Torah. Specifically, the employer will be classified as a thief and as one who withholds his worker’s wages (osheik). In order to avoid this classification, the employer must make certain that the employee is not underpaid by even one cent. Additionally, if the terms and conditions of employment remain unclear, the employer may come to be responsible for unexpected recompenses, damages, and reimbursements. Ambiguous contracts or lack of contractual documentation also result in reimbursements for the wrongly executed duties if such were not predicated by the precisely defined and detailed contractual terms of obligations.