Employment Contract—Definition & What to Include

Cody Cromwell
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Two Free Employment Contract Templates

TIP: The Employment Contract should contain the following details:

  • Name of the Employer
  • Name of the Employee
  • Employee’s Terms of Employment
  • Duties of Employee
  • Date of Commencement of Employment
  • Date of Termination of Employment
  • Hours of Work
  • Allowance
  • Remuneration

Leave ETC.

How Employment Contract Templates Work

Employment contracts are a great way to reassure yourself and your employees that the levels of risk and responsibility we take are logical, fair, and are limits of our liabilities. They cover a set of common concerns, issues, and protections that can be found in most standard employment contracts.

Employment contract template contracts include many standard provisions that make an agreement fair and reasonable. Typically, they include statements ensuring that both parties work together to determine fair and reasonable compensation and that contractual terms are adjusted to current circumstances and developments.

Such standard provisions include:

A Statement of Electronic Communication, Electronic Signature, and Data Security

Employment is the exchange of goods or services for wages, salaries, bonuses, profits, tours, or any other remuneration.

Significant technological advances have made it possible to communicate electronically between two or more parties. Most significant, when two or more individuals come together to make a contract (employment contract), the parties must be able to communicate electronically to handicap each other’s access to the job, work conditions, and compensation. This is called an electronic signature and it acts like the contract itself.

Developments have raised mass data security concerns, and it is important to have a contract in place that ensures data online is protected and that all communication is electronic when possible.

Employment Contract Template for W-2 Employee

The employment contract refers to the agreement signed between the employer and the employee. It is said to be ”the first item of business for both parties.” Thus, it is the contract which establishes the position, duties, and compensation of the employee.

Employer’s Standard Minimum Wages

In regards to the minimum wage, the employment contract oftentimes has the same minimum wage, or improves upon the minimum wage already provided to the employees. On the other hand, it is also sometimes less than the almost-universal minimum.

In such a case, both parties should reach an agreement, but they should also be mindful of the possibility that an employee could be fired for joining a union.

Car Wash Machines

This is so much depends on the type of business you drive. For a small size car wash, it is good to have a machine which can wash different size vehicles. This type of a car wash machine uses a standard water hose and a broom on the bottom. The one we have uses a nozzel and a sponge to wash off the cars.

With this type of car wash machine, we can wash 4 cars at a time. The one we have also comes with a hand held hose and pressure washer for cleaning the wheels and door mirrors.

Employment Contract Template for 1099 Contract Workers

What All Employment Contract Templates Should Include

The employment contract provides employees with all the necessary key information such as the contact information, job details, working hours of the employee, and so on in order for the association or its member to take action if there are any problems.

That said, a contract should include the following:

Job description with complete information

A detailed job description should be on the contract to ensure all external and internal parties are on the same page regarding the position, responsibilities, and associated tasks. It needs to include all the necessary key information such as the position’s title, category, job location, department, contact information, job type, number of working hours, key responsibilities, and a list of associated tasks.

Personal data of the employee

Along with the job description, the contract should include the personal data of the employee, such as name, age, a general description of the employee’s qualification and education, and the employee’s previous work history. This will help the association to assist / accommodate the new employee based on certain requirements and requirements set by the employer.

This data along with the personal details of the employee should be mentioned in the contract; the association should have a copy of the document with its own personal data so as to avoid duplication or loss.

Terms of Employment

Employment law governs the terms of employment (the terms on which an employee is employed by an employer) and is an intensely complex area of the law which covers many aspects from the types of employment contracts, to hourly rates, trade union recognition, holidays, breaks, pensions, redundancy, discrimination, maternity leave and many other areas. In this article, we will focus on what terms you should include in your employee’s contracts, and some of the key employment law issues in this area.

Employee Responsibilities

Your Employment Contract will help define your responsibilities as an employee and what you can expect from your employer. Whether you are a temporary or permanent employee, you will need to fill out an Employment Contract which will state your responsibilities, the terms of employment, including salary and benefits.

Whether you plan to work part time, full time, or are already an employee, your Employment Contract will help prevent misunderstandings, clarify expectations and ensure both parties act in a professional manner.

What to Include in the Employment Contract

Have a specific start and end date … Include your end date if you wish your employment to be a temporary part-time position, permanent part-time, or full-time.

Define the duration of your particular position.

Define the place of work.

Define the work hours and dates, including days and hours worked.

Define the duties/job description of the position.

Define the responsibilities of the position.

Define hourly rate of compensation.

Define all applicable terms, including vacation, normal sick days, holidays, amortization, vesting, retirement, profit sharing, bonus.

Define what benefits you expect such as life insurance, health or disability insurance and dental insurance.

Consider whether you will have an office, desk phone, or computer/printer.

Compensation & Benefits

Deciding what to offer your new hire can be a daunting task, especially if you’re not sure how much compensation you should give. Before you decide on compensation, you’ll need to figure out exactly what benefits you want to provide. You’ll need to consider whether you’re giving benefits only to your employees or only to your top performers or to every employee.

Workers Compensation

Smart workers compensation. If your only concern is to have your employees covered in case of an accident, then participating in the Kaiser Permanente Medical Group is often an effective option, especially if your new hire will be working outside the home. Participating in this medical group is cost-effective and can spare your employees of the hassle of dealing with medical bureaus when they file a claim.

If your new hire will be working in their own home, you can get by with a modest workers compensation policy, especially if they’re affiliated with a union.

The bottom line is that everyone’s needs are different, and we’re happy to discuss your situation and provide your new hire with the health insurance solution that suits your unique circumstances and budget best.

Non-disclosure & Non-compete Clauses

Employment contracts can help protect both the employer and the employee, and can also serve to protect the interests of the employer’s customers or clients.

The types of information you can use to protect your company this way can range from the obvious to the somewhat broad. The important thing to remember is that certain information must in turn be protected from disclosure by the employee while working in that capacity. Without such a provision, the information would be susceptible to disclosure by the employee to any third party or to the press.

While the confidentiality provisions of an employment contract vary from contract to contract, it’s important to be aware of these clauses. By not including such provisions in your contract you may end up opening the door for disclosure of confidential information to a third party, which would not have happened had such a provision been included in the contract.

In some cases, an employee may simply refuse to sign your contract because he or she doesn’t want the possibility of disclosure of confidential information to either a third party, a press or others.

In situations like this, you can go back to the negotiation table or to a third party to try and work out an agreeable, mutually beneficial contract.

If your negotiating efforts are unsuccessful, you may have to take a close look at your contract and decide whether to amend it or sign it as written.

Dispute Resolution Process

Employment contracts can be difficult to negotiate. The parties to a contract must be reasonable to reach an agreement. Parties can discuss their particular contracts and what is reasonable and not reasonable.

Here is a dispute resolution process for an employment contract.

The parties to a dispute should meet with a mediator to talk about their particular contracts. The mediator has authority to request drafts from the parties and set a time limit for the parties to negotiate.

The mediator can try to get the parties to come to an agreement by explaining to them what both parties want in the contract. Conciliatory language like ‑mutually beneficial– and ‑fair and equitable– can be used to describe the terms of the agreement in order for the parties to come to a compromise.

The mediator can also be used to mediate the negotiation process in order to get the parties to compromise and come to a solution. If the parties are not able to come to an agreement, the mediator makes a recommendation to both parties. Decisions can be made concerning the amount of damages if there is no solution.

Here are the things that employers must consider when negotiating the employment contract with the prospective employee.


I’m not going to give you an exhaustive list of the clauses to include in your employment contract, but I will give you an idea and a few of the basics.

Any signature, witness or notary public is permitted to act as a witness to the existence of a document, and it is absolutely imperative that your contract include their signatures.

The signature should include the employee’s name, address, date and a signature. The signature of the employer or the business is required in the case of any contract or agreement made for the purpose of employers or business.

You must also have a signature from a witness of the signature.

What Not to Include in an Employment Contract

Duration of the Job

The most common employment contract is an offer letter detailing the terms and conditions for taking up a job. The content of the offer letter is the responsibility of the employer and the employee—that being, the hiring company and the employee.

Most offer letters are also signed by the employee. This is because an offer letter may include terms and conditions such as references or work timings. All of these are mandatory under employment law. The type of terms and conditions should match the industry that the employee is joining.

There is no wrong number of period included on an employment contract. But it is important that the duration of the contract be clearly mentioned in the contract. There is no standard period mentioned on an employment contract, although it is advisable that the contract mention that the contract is to be of a duration that fits the scope of work that the employee should be doing.

Grounds for Termination

Tenant responsibilities:

The following are examples of conduct that will be grounds for termination. Generally, use of any of these behaviors will result in termination of the lease agreement; however the property manager may choose to handle these guidelines differently.

Exceeding the noise level allowed by the property.

Creating hazardous or dangerous conditions for guests or any private areas.

Excessive destruction to the property obtained or maintained through the tenant’s actions.

Any other conduct that would cause harm to the property’s entity and/or occupancy.

Security Deposits

For security deposits, there is no minimum amount. It is generally encouraged to charge the tenant a security deposit to protect the owner against the property if it is left in poor conditions by the tenant, and to help recover all costs to the property that are affected by tenant’s actions.

Process for Recovery of Security Deposits

If you choose to pursue any recovery, it is suggested that you should collect the deposit in cash, plus 3% of the total deposit amount to cover administrative costs. However, you can collect the deposit within the following time frames:

  • 10 days from when the tenant moves out (not including cleaning time)
  • 14 days after issuing a written Notice of Termination to tenant

Employment Agreements vs Employment Contracts

Most discussions on employment contract clauses focus on what is and what is not allowed in the document. In contrast, employment agreements are often thought of as a one-off definition or outline of the terms and conditions of the job.

Although this is true to some extent, it what isn’t included like salary, benefits, reporting requirements, severance, termination etc that are included is actually far more important. Contracts, for this reason, have evolved from legally meaningless documents into an absolute necessity in just about every job today. In particular, employers have started to take more and more efforts to include detailed, specific requirements and performance expectations in an employment contract.

As a result, the focus has shifted to what must be included in the document itself. Since most companies are moving away from boilerplate documents or canned contracts, the goal has shifted to ensuring that their document encompasses the actual needs of their organization.

A good starting point is knowing the difference between an employment contract and an employment agreement. Employment contracts are most commonly found in the film industry or other highly regulated environments. Employment agreements are used in the vast majority of other types of organizations.

The main difference between employment contracts and employment agreements is in how the law interprets the document itself. Employment contracts are, in essence, legally binding contracts.

Businesses That Employment Contracts Are Best For

Businesses Hiring Senior Managers or Executives

Job interviews are nerve-wracking and important to finalizing who your top choice is. You want to ensure you didn’t leave a tiny detail out of your final presentation. You have the job lined up. It’s time to sign the contract!

No matter what type of business you are in, there are specific forms and phrases that you must include in your employment contract. The contract details your long-term arrangement with the prospective business owner. It helps you establish the terms of your employment and outlines whatever is acceptable and non-acceptable behavior. Ultimately, it can be used as a reference in the event you do not intend on working out your business arrangement.

Your contract should include the following important details:

The contact details of your business owner.

Your job description and duties.

Your employment dates and planned quitting time.

The payment for your employment.

General business conditions, including working hours and holiday breaks.

Statement of acceptable or non-acceptable behavior.

Employment Agreement

Both you and the business owner should enter in into an agreement in which both parties agree on the terms of the business arrangement. This agreement will serve as a reference in case you and the employer go to the terms and conditions board with a disagreement. In addition, your employment contract should state how much salary you will be paid and how it will be paid.

Companies Wishing to Retain Highly Valued Project Employees

Firms Sourcing Talented Professionals Who Require a Contract

A specialist in the field of software development is responsible for determining ideas and strategies of creating software, and implement them. A programming contract must ensure the developer follows the program to provide his services offered by the employer.

Expense for employess shall be the basic requirements of the contract. Besides expenses, the program must assure that the program fee would be delivered by the programmer in a well outlined and defined manner.

Employee’s own fee is one of the charges that places the worker in a position to have a full and complete control of the project and its outcome. This must be clearly defined and understood in a separate section of the contract.

After several months of researching and drafting past blogs, I’ve made a few essential steps about hiring a contractor, as well as to ensure that you don’t damage your project.

Startups Partnering With Independent Contractors & Freelancers

Startups are creating jobs using Independent Contractors and Freelancers.

In one year’s time, business, accounting, and employment regulations are changing.

Bringing freelancers and independent contractors into the fold requires a certain level of sophistication.

They do not have set schedules, the office hours are flexible, and you don’t have to worry about finding, managing, and paying for office space or benefits. They work can be done from anywhere.

Freelancers and independent contractors offer greater flexibility, yet you have to manage and pay them, as well as allow them their flexibility.

But if you are truly committed to building a business that uses freelancers and independent contractors, there are a few things you can do to make the work environment better and provide better for the freelancers.

At a minimum, you should consider doing the following:

Forced Vacation. One of the first policies you should consider is forced vacation. This policy for forced vacation imposes time limitations on work hours for a specific holiday period. You specify this period of time as part of the policies of the company.

When to Use an Employment Contract

Employment contracts are commonly used to draw up a mutually agreed upon agreement between an employer and employee. They are usually used in organizations with a hierarchical structure that has a clear relationship between the two parties. An employment contract should be used on the understanding that it will be drawn up after the employer and employee have signed an employment agreement in an adhoc relationship.

An employment contract can be used for a fixed-term or an indefinite term contract. The fixed-term contract will be used if the employee has agreed to work for a specific amount of time. An indefinite term contract will be selected based on the nature of the particular job.

An employment contract should also be used in establishments where the employer normally brings in employees that work below the management levels. It should also be used in establishments which have an employee’s welfare fund.

The employment contract should be in alignment with the employee’s status and job description. It should also have a clause stating that both the employer and the employee are to discuss any change to their status and job description, as well as any possible changes to the terms and conditions on a regular basis.

Once the employment contract has been drawn up, it should be in the employee’s best interest to make sure that no further changes are made without consulting the employee.

Employment Contract Template Providers

Employment Contracts give a job offer a structure and purpose. It is a formal contract between an organization and a prospective employee and underpin a legally binding agreement.

It also clarifies and defines the terms and conditions of employment with necessary clauses, which are most of the time stipulated by law and therefore necessary to include in your contract. Depending on the place, state, location, and type of business adopting such a contract gives you and your organization clear advantages.

Designed to be legally binding and comprehensive, Employment Contract should neither be regarded as an open-ended contract to be renegotiated upon changing job positions or relocation nor overlooked as a simple addition to any employment contract. It is generally drafted by experienced professionals in companies or organizations.

Employment Contract have two types of contracts, namely, open-ended contract and offer letter. An employment contract agreement is considered of an offer letter includes attachments that define the basic functions, job description, working conditions, and other matters.

A well-written employment contract gives employee and employer a clear understanding of each other’s expectations and will be used as a template for both sides for the purpose of clarity. The template should also be specifically drafted for the needs of the organization; however, the basic must always remain the same.

Ask Your Attorney for an Employment Contract Template

If you’re hiring someone to work for you, you should think about creating a written contract with them. An employment contract can outline a list of benefits, duties, and expectations between you both.

Youra contract can help you define what you both want out of your relationship and how you’ll carry out the job. It can also help protect you from being sued by the employee.

Remember, there are a few things that you can’t legally agree to in an employment contract. Any information that involves trade secrets or confidential information can’t be defined in the contract. Also, you can’t outline any expectations that violate your state’s anti-discrimination laws.

Another thing to keep in mind is that an employment contract and any freelance contracts should have the same terms and conditions for your protection. Which is why it’s very important that you put all the terms and conditions into one contract.

Let’s take a look at what some of those terms and conditions might include.

Ask Your HR or Payroll Provider for Sample Agreements

You will be able to customize a new agreement, if the one on your company’s website isn’t to your liking. In addition, using pre-made agreements, especially ones that have been drafted by someone you trust, will help you avoid fears that you’ll forget some important detail. If you are in the HR or payroll department, you may also draft your own standard agreement for salary, benefits package, and other issues like that.

What an Employment Contract Costs

Pros & Cons of Using an Employment Contract

A good job contract can be hard to find these days, especially with the economic downturn, and it’s important that employers keep them up-to-date.

A well written and detailed employment contract can help you manage expectations around job termination and the start and end dates as well as help to protect both you and the business.

However, there’s a reason why employers almost never include employment contracts: depending on the length of your employment, a written contract of any kind can seem like a big hassle for employees as well as the employer. So big is the stigma around employment contracts that many employers have begun removing clauses that were once standard, such as those about spelling out severance or vacation days.

Whether there’s liability to compensate for wrongful termination, or whether the employer has to pay for an employee’s vacation, if these are important to you, you should include them in your employment contract. Whatever you include, it’s important that you look at the effect that simple things like spelling out a term like severance payments have.

Pros of Using an Employment Contract

Cons of Using an Employment Contract

Employers and employees both have their benefits and disadvantages. In most cases, employees, especially new ones, hope for a job that they can enjoy and become part of the family, whereas employers are looking for capable employees that can get the job done efficiently.

If you are a new employee and have a hard time negotiating your contract (most likely this will be a newly established company), I have compiled a few points that you should consider and keep in mind before signing the contract.

When to Use an Employment Contract Template Alternative

Offer Letter & Job Description

It is very important to know which provisions you wish to include or exclude from your employment offer letter. Choosing which terms to include, and which terms to exclude from your offer letter are two important job offer negotiation factors that can have a big impact on the success of your negotiations.

Employee Agreement

Employee Handbook

The importance of creating an employee handbook cannot be stressed enough. As an employer, you have to be clear about your company’s policies and the employee handbook serves as a resource for both you and your employees.

An employee handbook should include all of your company’s important policies. It includes everything from dress codes to contact names and phone numbers. Enforcing the policies in the employee handbook directly gives your employees a sense that you take the welfare of your company’s employees seriously.

Employee handbooks are an important tool in ensuring a safe working environment. The more discipline and a stricter atmosphere you enforce with your employee handbook the less incidents you will have to deal with when it comes to potential law suits.

The employee handbook can also function as a resource for your employees and a documentation of what is acceptable and unacceptable employee conduct. The employee handbook can act as a guide in determining what you will and will not tolerate.

Including a sample employee handbook in your company directory is also important. This alleviates any confusion or time wasted in creating the handbook for your employees.

Employer Policies

The following is a list of some of the most important policies that you should include in your employee handbook:

  • Dress code, uniform policy, and the designation of work attire
  • Employee benefits and discounts

Performance Management Goals

Performance management is a form of employee management, where management and employees define expected performance and accountability for meeting it. It integrates individual goals with the organization’s goals through a system of reporting, resource allocation, development, feedback, coaching, and rewards and penalties to keep people on track to achieve organizational goals.

According to Kaizen, employee performance management looks closely at employee self-efficacy (a person’s belief that they can learn and develop skills for their job) by providing development opportunities that give employees the chance to learn new skills and improve their performance. This form of management also uses day-to-day feedback along with monthly and yearly evaluations to show employees where they are falling short and what they can do to improve.

Performance management also places great emphasis on measuring and rewarding success, as well as on providing negative feedback and morale-building. It plays a key role in helping employers stay on track to achieve their goals by making strengthening employees’ contributions to the success of the organization a priority.

Frequently Asked Questions (FAQs) About Employment Contracts

There’s always a sense of relief when you get the call and the contract is signed. But then some time passes and you begin to wonder what your new responsibilities are. In order to make your transition more smooth and organized, you need to include familiar terms in the contract such as the definitions of terms, what to do in times of emergency, as well as stipulations as to when and how you will be compensated.

Things to Know about Employment Contracts

There are contracts for hiring, firing, and different types of employment. A hiring contract is a written agreement between you and another person when you hire that person to work for you. It’s important to clearly state the terms of this agreement. If you’re not sure if you need a contract, here are a few questions to ask yourself:

  • Does the job require a lot of training? – You may want to make a hiring agreement if a job requires a lot of training. An employment contract ensures the new employee knows what is expected of them.
  • Will you be hiring your employee for a specific amount of time? – Once the job is done, will the employee continue to work for you as a consultant? Once your project is over?

Who benefits most from an employment contract—employer or employee?

An employment contract is a written contract detailing the rights, duties, rules, regulations, standards to be maintained, etc towards an employee in an organisation.

It is one of the most important and essential documents in the employment sphere and must be well-drafted. The benefits are more on the sides of the employee than that of the employer. Therefore, it is essential that employers, before adopting an employment contract, do their homework. They must be well aware of the facts whether it is in merit of circumstance or whether it is in the nature of the job or the quality of the employee. And also be sure of what the consequences would be if the terms and conditions of the job duties and treatment of the employee are not met.

The employee will benefit because within the contract they – »write the terms and regulations and rules under which he works. The contract will help in retaining them, prevent them from leaving the organization or reduce any loss to the employer by giving them other work.

The employer will benefit as they will be well aware of the terms and conditions and will not have to keep redoing it for each new employee.

How can I break my employee contract agreement?

Employment contracts are a useful tool to protect employees by establishing clear terms between employer and employee. They can bind the parties in a contract and define legally enforceable terms.

Employment contracts are not agreed upon by the parties; they are drafted and then confirmed by a contract. This is called an offer and an acceptance of employment contract. Offer and contract are the important terms along with the common contract terms.

As its name implies, an offer is a proposal for the contract that has been accepted or carried out by the party. In employment contracts, the party that makes an offer is also known as the offeror and the party that takes the offer is the offeree.

The Offer – The written offer of employment contract defines all the ways in which the contract is going to be fulfilled. It has many provisions including the desired terms and conditions. The offer should also specify the person head of employee or manager who are responsible to help the employee to comply with the conditions of the contract.

The contract – it is called the contracted clause, to define the responsibilities of the parties involved. They are the contractual obligations between the parties which lay down the rules and regulations that both parties agree to follow. This clause provides the general rules concerning the services and information that the parties have to provide such as their address and telephone number.

Can an offer letter serve the same purpose as an employment contract?

Most private-sector employers do not have their own contract of employment in place to accompany an offer letter when the employer is making an employment offer. The offer letter is the written equivalent of a verbal offer of employment.

The employer will use the offer letter as evidence in making a claim to the Employment Tribunal if a dispute over the contract arises, especially where the employee rejects the offer in lieu of joining a rival employer that has a contract of employment in place.

A common phrase used in offer letters is –the offer is subject to employee’s satisfactory performance of a medical examination.” This phrase serves as an important precursor to the employment contract as the employment contract will be the framework in which that employee’s performance will be judged. The obligations in the employment contract will be set out in separate documents, including the employee’s employee handbook.

It is important to specify the date of the offer letter, as this date is used to create the employee’s in-service period. All employees who start work with a company on 1 January are placed in an in-service period for the first calendar month following the start of employment.

Is a written employment agreement the same as an employment contract?

Bottom Line

A contract is very much a document of business as it refers to the terms and conditions of provision of services, access to goods, etc. When one party agrees to offer the other party a specific product and the other agrees to pay a certain amount of money, it is called an agreement to enter into a contract.

An offer, acceptance and the formation of the contract will be discussed in the next chapter.

A contract is only binding on the parties when certain elements have been established. The main question is what elements are required to complete a contract?

Generally, in order to complete a contract, the offer and acceptance of a contract are required. However, within the framework of an agreement, the presence of a document is also necessary. Despite being a precondition to the execution of an agreement, if the term of the contract is specific or has been stated as a matter of fact, this does not necessarily mean that a document has to be established. The execution of the contract can be regulated through verbal meetings, through the course of business, or express agreements.

If the expiration of the contract is not stated, one of the parties, either the person who concludes the contract or an intermediary, undertakes the risk of any changes in the market that could have a negative impact on the value of the product.