Free Employment Contract Template

A contract of employment is a written agreement between an employer and an employee. It covers a number of essential elements that detail the precise nature of the relationship between the two parties.  This might include the salary that will be paid and whether the employee is bound to any agreements of confidentiality (such as an NDA), in addition to other conditions.

Contracts of employment can be known by a number of alternative names, such as:

• Employment contracts

• Employment agreements

• Work contracts

• Job contracts

• Contracts of service

Employment can take many different forms. Whether you are running a company or applying for a job, you will see a variety of employment types that can be secured by prospective employees. This will usually include one of the following examples: 

• Full-time employment: Full-time jobs are an indefinite working position (i.e. there is no pre-defined end date to it) that usually requires employees to work a full schedule of around 40 hours per week.

• Part-time employment: Part-time jobs are another kind of indefinite work, although they require an employee to work fewer hours per week than a full-time position (usually below 30 hours per week).

• Period or term employment: This kind of employment is usually used for shorter-term projects. Period or term employees are employed for a defined amount of time and most often leave the company once the duration has elapsed.

• Trial period (probationary employment): Most full-time and part-time employment contracts will include a trial period of a few weeks or months to allow both parties to decide if the agreement meets their needs as expected. This allows one side to end the contract early without penalties if it doesn’t live up to its promise.

• At-will employment: At-will contracts cover a working arrangement where an employee may be terminated at any time for any reason as long as it doesn’t contravene federal workplace discrimination laws.

• Temporary employment: Temporary employees are contracted for a fixed period of time to fill sudden or short-term vacancies in a company’s workforce. Workers may be hired on this basis for a few weeks or months at a time.

An employment contract is used to set expectations and clarify the nature of a relationship between an employer and an employee. It does this by binding both parties and outlining their responsibilities in writing.

The contract provides legal protection for both parties by defining what obligations must be met. It also sets clear and understandable conditions for the relationship to avoid any confusion or misunderstandings about who is responsible for what.

It is very important that your employment agreement covers a number of essential terms. These will define, among other things, the type of employment that will be contracted, and the salary that will be paid.

However, each individual contract is different and will usually be written to allow the conditions to fit the needs of the employer and employee best. The following terms will normally be covered in an employment agreement:

• The names of both parties.

• A description of the employee’s duties.

• The employee’s daily schedule and the hours of work they must fulfill.

• The salary that will be paid.

• When the contract will end or how it can be legally ended.

• Notice periods for ending the contract early.

• The applicable state law that will prevail over the agreement.

• How disputes will be resolved.

• Additional employment provisions, for example, terms that protect the confidentiality of company data or stipulating indemnification.

An employment contract must be written with care in order to be fully effective and valid. It is important to ensure that all the information is written in plain English in full sentences so that there can be no ambiguity about its contents.

The main body of the document will be structured into essential sections that outline and explain the main terms of the contract. At the end of the form, it is also possible to add additional clauses and restrictive covenants that place controls on what the employee can and can’t do whilst working under the agreement.

Our step-by-step template customization questions can take you simply through this process. It will help you ensure you don’t miss any important information in your final draft and will help explain each essential element you must add. 

Most employers and employees choose to create employment contracts to create trust and a clearly defined working partnership between them and the other party. However, these agreements don’t work best in every situation.

Depending on the type of employee you want to hire and the type of work that is to be done, an employment agreement may or may not suit your needs. Some of the most important pros and cons to consider before deciding if this is the right kind of contact for you can be found below.

Usually, employers are required to withhold and pay income taxes, Medicare taxes, social security taxes, and unemployment tax on wages paid to employees, but not to independent contractors. 

If you are unsure whether a worker is an independent contractor or employee, you can fill out a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. The IRS will review the circumstances and decide the worker’s status. 

In the case of employees, employers must report taxes by filing one or more of the following forms:

• Employers who withhold federal income tax, social security or Medicare taxes (including withholding on sick pay and supplemental unemployment benefits): Form 941, Employer's Quarterly Federal Tax Return 

• Employers who are filing to report agricultural wages: Form 943, Employer's Annual Federal Tax Return for Agricultural Employees

• Employers who have received written notification about the Form 944 program: Form 944, Employer’s Annual Federal Tax Return

• Employers who are filing to report backup withholding: Form 945, Annual Return of Withheld Federal Income Tax

It can often help to see a real example of how your final employment contract will appear before starting one of your own. If you want to understand more about how these essential documents are structured and written, take a look through our template example below.

There are many other important related documents that employers and employees must use to facilitate the operation of a business. If you need to create another essential legal document for your company, try one of our expert templates below:

• Resignation Letter

• Non Disclosure Agreement (NDA)

• Independent Contractor Agreement

• Service Agreement