1. Employment Contracts
2. What is Included in an Employment Contract?
3. When is an Employment Contract Needed?
4. Advantages of Employment Contracts

Contracts for work are a very common thing nowadays. Contract work can include a number of different types of jobs, ranging from temporary jobs to freelance positions. Contracts for work typically set a defined period of time—such as three months or until a job is finished—where the contractor works for the employer only until that predetermined time frame runs out. A contractor is not considered an employee of the company, and as such, they receive no benefits.

Employment Contracts

An employment contract is typically the document that a contractor and an employer enter into. It is a written agreement documenting the relationship of the two parties and sets out the responsibilities, expectations, and duties of each party. Employment contracts also set out the basis for terminating an employee. Most employers have the right to fire an employee “at will.” But many times, employment contracts are used by former employees to show that there was a limited basis for the employer to fire them. By contrast, with contract workers, because the contract sets out a defined period of time before termination, the contract worker is generally terminated only “for cause.”

What is Included in an Employment Contract?

The most important part of an employment contract is defining the responsibilities and expectations of the employee and the employer. Employment contracts also set out basic information such as:

  • Employees’ health benefits
  • Paid time off and sick leave
  • Employee grievance protocols
  • Post-termination information

The employment contract should explicitly state if the employee is “at will,” or if the worker is under a contract. Both the employer and the employee or contract worker should sign the contract and keep a copy for their records.

There are some details that should be left out of the employment contract. If an employer hires an “at will” employee, the contract should not include any specifics of job duration. This can result in a court finding that the employee is actually a contract worker and not an employee “at will.” If an employer fires this employee before the date listed on the employment contract, they may be liable for paying the employee for the entire time period, even if the employee was fired prior to the date listed on the contract.

In addition, an employment contract should not list explicit reasons for termination. This can actually undermine the protection granted to the employer for an “at will” employee, because a court can determine that the employee could only be terminated for cause because there is an explicit basis for termination listed in the contract.

When is an Employment Contract Needed?

There are four common situations where an employment contract is highly recommended.

  1. High-level employees. If an employee is gaining access to proprietary or sensitive information, it is a good idea to have them sign an employment contract to ensure that the business’s important information remains protected.
  2. High-valued employees. If an employee is highly valued, an employment contract can ensure that they provide the employer with advanced notice of them leaving so that the employer has adequate time to find a replacement.
  3. If a candidate will not agree to work for an employer without an employment contract, then such contract may be necessary if the employer wishes to hire the candidate.
  4. Freelancer or temporary worker. It is always a good idea to have an employment contract for temporary workers or freelance positions to ensure that each party is fully aware of their job responsibilities and job length.

Advantages of Employment Contracts

There are a number of different reasons why it is a good idea for a business to have employment contracts with its employees. If an employee has access to certain classified information or just highly sensitive, proprietary information, an employment contract can include a confidentiality agreement. A confidentiality agreement will ensure that any information an employee comes across while employed will not be disclosed to anyone.

Employment contracts also set out exactly what the employer expects of the employee, and what the employee can expect of the employer. This narrows the possibility for any type of confusion or disputes arising at work.

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