Sample Employee Contracts: Everything You Need to Know
Viewing sample employee contracts can help new employers get a sense of what they need to include in their employee agreements.3 min read
2. Elements of a Contract
3. Clauses You Might Include in an Employment Contract
Viewing sample employee contracts can help new employers get a sense of what they need to include in their employee agreements. Even if you are not an employer, you more than likely worked for a company at one point, and depending on your position, you may have signed an employee agreement.
An employee is a person who works for a business to perform specific duties for monetary compensation. These duties are outlined in a job description that is included in the agreement.
What Is an Employment Contract?
The business relationship between and an employer and an employee is formalized through an employment contract. In this relationship, the employee is hired to perform a set of duties, tasks, and responsibilities, while the employer usually provides the tools so that the employees can perform. The agreement is also in place as part of regulatory mandates like taxes and lawful employment.
An employment contract goes by several other names:
- Job Contract
- Employment Agreement
- Agreement of Service
- Contract of Employment
- Contract of Service Employee Contract
The employment contract defines the role and responsibilities of both the employer and employee while the parties are under the agreement. An employment contract is often used for management employees, short-term positions, and freelance roles. This document is enforceable in the courts as soon as the employer and employee sign the agreement.
Elements of a Contract
- Employee name: the name of the party or person hired to work.
- Employer: the name of the business who hired the employee.
- Position: the role the employee will perform. It includes a title and the responsibilities for the role. If the employee is an independent contractor, then this section should describe the duties the person will perform.
- Compensation: the monetary amount the employee or freelance will make. It includes the rate as well as the overtime rate where applicable. It also outlines the frequency with which the person will be paid. This amount is usually expressed as an hourly, weekly, monthly, or annual amount.
- Hiring date: the first day the employee will work for the employer.
- Term: the time period the employer is expected to work. If this is a contract worker, it may state a fixed time or a time based on when a particular project is expected to end. It may include an employment clause so both the employer or the employee can terminate employment should the need arise.
- Benefits: any benefits that are a part of the compensation package. For instance, an employee may receive benefits like vacation, insurance, paid time off, maternity leave, etc. that are included in their compensation package.
- Signatures: includes the employee and employer. Both signatures are required in order to make the contract legal. A best practice is for everyone to keep a copy of the document should any questions arise.
Clauses You Might Include in an Employment Contract
- Confidentiality clause. Confidentiality clauses may be used to protect matters like trade secrets, clients lists, and classified information. Should the employee leave, he cannot share information with future employers.
- Non-compete clause. If the employee or contractor signs a non-compete clause, then the employer cannot work for a competing firm or use any information to give the employer an edge. Typically the inability to work with specific employers is for a specific time period between the termination date for the old employer and the hire date for the new employer. For further information regarding non-compete, see the American Bar Association.
- Non-solicitation clause. Should you terminate employment with your employer, a non-solicitation clause will prevent you from recruiting co-workers or acquiring your former employer's clients. A non-solicitation clause is considered restrictive, and California, Montana, North Dakota, and Oklahoma do not recognize restrictive clauses. Therefore, in these states, employees are free to work for competitors.
- Reimbursement clause. If you have a reimbursement clause in your contract, then it will outline the what job-related expenses the employer will cover.
- Probationary period clause. Some employers include a probationary period within an employment agreement. It is a test period to see if the employment relationship will work.
Hiring employees is one sign that the need for your goods or services is rising. It is good for you, future employees, and the economy.
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