An employment contract is a legally binding agreement between an employer and an employee. It outlines the terms and conditions of the employment relationship, including job duties, salary, benefits, and termination procedures. In order to protect both parties, it is important to have a written employment contract in place before starting work. This blog post will discuss the different types of employment contracts, what should be included in them, and provide a sample contract for your reference.
What is an Employment Contract and Why Do You Need One
An Employment Contract is a binding agreement between an employer and employee that sets forth the rights and responsibilities of each party. The contract establishes an employer’s expectations from the employee and vice versa. It is important to have a written employment contract in order to minimize potential disputes and misunderstandings between the employer and employee.
A standard employee contract template may be used to formalize your new hire’s employment agreement. Employee contracts include information such as the number of hours worked, pay rate, and duties of the employee. Both parties can look to the contract in case of a disagreement or conflict regarding job conditions.
The Different Types of Employment Contracts
There are different types of employment contracts, and the provisions included in each contract will vary depending on the employer’s needs and the employee’s qualifications. For example, an employment contract for a highly skilled worker will likely include different provisions than a contract for an entry-level worker.
There are three main types of employment contracts: verbal, Implied-In-Fact, and Written. Let’s take a closer look at each type:
Verbal contracts are based on the promises made by both parties without any written documentation. While these types of agreements are legally binding, they can be difficult to enforce since there is no physical evidence of the agreement.
Implied-In-Fact contracts are based on the actions and behavior of the parties, even though there is no written agreement. These types of contracts are typically created when an employee is hired without a written contract.
Written contracts are the most common type of employment contract. They are also the most enforceable since they contain a clear and concise description of the duties and responsibilities of both parties.
What Should be Included in an Employment Contract
There are a few key components that should be included in an employment contract, such as:
- The names of the employer and employee
- The start date of employment
- A description of the duties and responsibilities of the employee
- The salary or wage amount and frequency of payment
- The length of employment (if it is a temporary or seasonal position)
- Any benefits that the employee is entitled to receive, such as health insurance or vacation time
- The termination procedures for both the employer and employee
While not all of these components need to be included in every employment contract, they are some of the most important elements that should be considered. An experienced attorney can help you draft a contract that meets the specific needs of your business.
Rights and Duties of the Parties
An employment contract lays out the expectations, rights, and responsibilities of both employer and employee. This mutual understanding helps to set the tone for a positive, productive work relationship.
The employer’s rights and duties:
- To provide a safe work environment
- To pay the employee their agreed-upon wage
- To comply with all applicable employment laws
The employee’s rights and duties:
- To perform the duties outlined in their job description
- To obey the employer’s lawful orders
- To refrain from committing any unethical behavior that might put their or others’ safety at risk in the workplace.
There are also several important provisions that should be included in an employment contract, such as:
- A non-compete clause prohibits the employee from working for a competitor of the company during their employment and for a certain period of time after they leave the company
- A non-disclosure clause protects the employer’s confidential information from being shared by the employee
- An at-will provision states that either party can terminate the contract at any time without cause.
While an employment contract is not required by law, it is a good way to protect your business and set expectations with your employees.
It is important to note that these are just some examples of rights and duties that may be included in an employment contract. The specific rights and duties of both parties will depend on the nature of the job and the agreement between the employer and employee.
How to Terminated an Employment Contract Lawfully
There are four ways to lawfully terminate an employment contract:
- By mutual agreement between the employer and employee
- For cause – When the employee has breached the contract or caused damage to the employer
- By notice – When the employer provides written notice to the employee in accordance with the terms of the contract
- Expiration of term – When the contract comes to an end on its specified date
Employment contracts can be terminated in a number of ways. The most common way is by mutual agreement between both parties. In this case, both the employer and employee agree to end the contract and sign a document to this effect.
Another way an employment contract can be terminated is if one party breaches the terms of the agreement (for cause). For example, if an employee does not show up for work or fails to perform their duties as outlined in the contract, the employer may have grounds to terminate the agreement.
It is also possible for an employment contract to be terminated by notice. In this case, either party can give written notice to the other in accordance with the terms of the contract. For example, many contracts will specify that either party can give two weeks’ notice to terminate the agreement.
Finally, employment contracts can also be terminated by the expiration of the term. This is simply when the contract comes to an end on the date that is specified in the agreement. For example, if a contract is for a one-year term, it will expire one year from the date that it is signed.
An employment contract can be terminated for any number of reasons. However, it is important to have a clear and concise contract in place so that both parties know their rights and responsibilities should the agreement need to be ended.
Sample of Employment Contract Template
Here below is a sample of an employment contract template. This is not to be used as an actual contract, but rather as an example of what a contract might look like.
EMPLOYMENT CONTRACT
This Employment Contract (the "Contract") is entered into on [DATE], by and between [COMPANY NAME] ("Employer"), and [EMPLOYEE NAME] ("Employee").
For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree to enter into this Contract on the following terms and conditions:
TERM OF EMPLOYMENT
The initial term of this Agreement shall begin on the date of this Agreement and end on [DATE]. Employee may be terminated by Employer at any time, with or without cause, by giving Employee [NUMBER] days written notice of termination.
EMPLOYEE DUTIES
Employee's duties shall include [LIST OF DUTIES]. Employee shall perform such other duties as may reasonably be requested by Employer from time to time.
COMPENSATION AND BENEFITS
In consideration for the services to be performed by Employee under this Agreement, Employer shall pay Employee a salary of [AMOUNT] per year, payable in equal installments on the first day of each month during the term of this Agreement. In addition, Employer shall provide Employee with health insurance coverage under a policy of group health insurance maintained by Employer for its employees.
EXPENSES
Employee shall be reimbursed for all reasonable out-of-pocket expenses incurred by Employee in the performance of his duties under this Agreement, provided that Employee shall submit to Employer itemized statements of such expenses within thirty (30) days after incurring same.
TERMINATION
This Agreement may be terminated by either party upon thirty (30) days written notice to the other party.
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether oral or written. This Agreement may not be amended or modified except in writing and signed by both parties.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed as of the date first above written.
Employee: _____________________________
Date: ___________________
Employer: ____________________________
By: ___________________________
Title: ________________________
Date: ___________________