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Last Update July 18th, 2024

Also Known As

Work Contract

Job Agreement

Employee Agreement


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What Is a Contract of Employment?

A Contract of Employment is a written agreement between an employer and an employee, detailing key elements of their relationship.

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

Types of Employment

Several types of employment, each with different conditions and hours, are suitable for different job roles and company needs.

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.

How Does an Employment Contract Work?

An Employment Contract sets clear expectations and responsibilities for both employer and employee by legally binding them together.

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.

Terms To Include in a Working Employment Agreement

Your employment agreement must include essential terms such as employment type and salary.

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.

How To Write a Contract Agreement

Write an Employment Contract carefully to ensure it's effective and clear. Use plain English and complete sentences to avoid any confusion.

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.
Employment contract tips infographic

Employment Contract: Pros and Cons

Employers and employees often use Employment Contracts to build trust and define their working relationship clearly. 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.

Pros Cons
Employment contracts create a clear and understandable outline of the obligations of both parties. Whilst this is also an advantage, the legally binding nature of the contract can deter some parties.
Employment contracts can be written to include special protections for private data and copyrighted material that is being used by the employee. Employment contracts usually contain rigid, unchangeable terms and offer little in the way of flexibility.
Employment contracts are usually the most stable form of working agreement available. Parties can face financial penalties if they break the contract.
The agreement provides legal protections for both parties so that nobody can be defrauded. As the terms are set from when the contract is signed, the agreement can only be changed following negotiation and a new agreement being approved by both parties.

IRS Requirements for Employment Contracts

Employers must generally withhold taxes like income, Medicare, and social security from employee wages, unlike with 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:

Employment Contract Sample

Seeing a real example of an Employment Contract can help you understand how to structure and write your own. Take a look at our template below for guidance.

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Example of an employment contract

Employment Contract FAQs

Creating a secure and legally effective Employment Contract involves many details. Learn about key elements in these contracts by reading our FAQs below.

Who are the Parties in an Employment Agreement?

In an Employment Contract, the 2 main parties are the employer and the employee, where the employee provides services in exchange for payment.

What Is the Difference Between an Employment Contract and a Temporary Employment Contract?

The main difference between standard and temporary Employment Contracts is their duration.

Most employment contracts will be created with no end date and will only terminate once an employee or the company serves official notice by submitting a resignation letter or an employee termination letter. Temporary contracts on the other hand will have a pre-arranged expiry date when they will come to their natural end.

What Is a Probationary Period?

A probationary period is a trial time written into contracts, allowing both sides to assess the agreement. During this time, either party can end the contract early without notice.

It is possible that in this period, a party might decide not to continue working under the contract before the probation period ends. This might happen if they are dissatisfied with their new working relationship and wish to pursue other opportunities instead.

What Are Confidentiality Clauses?

Confidentiality clauses in Employment Contracts and independent contractor agreements restrict how secret information and private data can be used, preventing employees from sharing sensitive data.

What Is a Notice Period?

A notice period for an employment contract indicates the minimum amount of time that either party must give to inform the other party of their intention to terminate the agreement. In many jobs, this will often be just 2-4 weeks in advance of ending the contract. However, for positions of greater seniority, it might be necessary to serve a notice period of several months.

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Example of an employment contract

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Preview of your Employment Contract

This Employment Contract (hereinafter, the “Contract”), is dated as of _________ (hereinafter, the “Effective Date”), and is entered into by and between the following Parties:

_________, with a permanent address at _________, on behalf of _________ (hereinafter, the “Employer”),


_________ with a permanent address at _________ (hereinafter, the “Employee”).

1) _________ is engaged in the business of _________.

2) _________ desires to employ and retain the services of _________ according to the terms and conditions hereinafter set forth.

3) _________ desires to enter into such employment upon the terms and conditions hereinafter set forth.
In consideration of this mutual understanding, the Employer and the Employee (hereinafter, the “Parties”) covenant and agree as follows:

1) _________ hereby employs _________ as a(n) _________.

2) _________ hereby accepts such employment, and agrees to abide by _________ and _________'s supervisory personnel rules, regulations, policies, and practices, including those concerning work schedules, vacation, and sick leave, as they may from time to time be adopted or modified.

3) _________ will perform the services described on the attached Exhibit A, which is made a part of this Contract by this reference.

4) _________'s title and responsibilities may be changed by agreement during the course of this Contract. However, the terms and conditions set forth in this Contract shall remain in full force and effect, unless otherwise specified by the Parties.
Best Efforts of Employee: _________ will at all times faithfully, industriously, and to the best of _________'s ability, experience, and talents, perform all the duties that may be required by the express and implicit terms of this Contract, to the reasonable satisfaction of _________. Such duties shall be provided at such place(s) as the needs, business, or opportunities of _________ may require from time to time.

_________ will primarily perform the job duties at the following location:

     - _________.
Indefinite Term: This Contract shall become effective on the _________ and shall continue to have effect for an indefinite term of years, unless otherwise terminated in accordance with the provisions of this Contract.

_________ acknowledges and agrees that all intellectual property and related material, including but not limited to any copyrightable works, ideas, discoveries, inventions, patents, products, or other information (hereinafter, the “Work Product”), performed under this Contract shall be owned by and belong exclusively to _________.

If requested by _________, _________ will provide and execute all necessary documentation to confirm or perfect the ownership of _________ to the Work Product.

1) Employee's Termination: _________ shall have the right to terminate this Contract at any time, with or without notice, in accordance with applicable local, state, and federal labor laws.

2) Employer's Termination: _________ shall have the right to terminate this Contract at any time, with or without notice, in accordance with applicable local, state, and federal labor laws.

If _________ is in violation of this Contract, _________ may terminate employment without notice and with compensation to _________ only to the date of such termination. The compensation paid under this Contract will be considered _________'s exclusive remedy.

Any and all notices, requests, demands, or other communications to be given under this Contract must be given (i) in writing and (ii) personally delivered, mailed, or transmitted by electronic mail to the Party to whom such notice or communication is directed.

Notices will be deemed received when hand delivered, delivered by agent, seven (7) days after being placed in the post, postage prepaid, or three (3) days after transmission by electronic mail, addressed as follows:


Change of Address: Either Party may, from time to time, change its address by providing written notice to the other Party in the aforementioned manner.
Governing Law: This Contract shall be governed, construed and interpreted in accordance with the laws of the .
Non-Discrimination: The Parties shall not discriminate against any Employee or participant in the performance of the duties, responsibilities, and obligations under this Contract because of race, color, religion, gender, age, marital status, disability, political or religious beliefs, national or ethnic origin.
Entire Agreement: This document constitutes the entire agreement and understanding between the Parties, and supersedes all prior agreements and understandings, whether oral or written, with respect to the subject matter of this Contract.
Severability: This Contract will be enforced to the fullest extent permitted by applicable law. If for any reason any term or provision of this Contract is held to be invalid or unenforceable, such invalidity or unenforceability will not affect any other term or provision of it. However, the Parties shall cease performing such invalid or unenforceable provision and negotiate in good faith to replace such invalid or unenforceable provision with a valid, legal and enforceable one consistent with its original purpose.
Amendment: This Contract may be amended or modified as needed. However, any modification, variation, or amendment of it shall only be valid if made in writing and duly signed by the Parties obligated under the amendment.
Waiver Of Contractual Right: The waiver by either Party of a breach, default, delay, or omission of any of the provisions of this Contract by the other Party will not be construed as a waiver of any subsequent breach of the same or other provisions.
IN WITNESS AND AGREEMENT WHEREOF, _________, on behalf of _________ has executed this Contract with the consent of _________, given here in writing. This Contract is effective as of the date _________ above written.

By: ___________________________________       Date: __________________

By: ___________________________________       Date: __________________
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