An employment contract is a binding, written agreement outlining the terms of an employer-employee relationship. It describes the responsibilities and duties of the position, compensation, and evaluation standards. Most importantly, an employment contract limits when the employee may leave his position and when the employer may terminate the employee.

Employment contracts will usually cover:

  • Job title & scope of employment
  • Salary & benefits
  • Standards for evaluation
  • Length of employment
  • Grounds for termination

When Is an Employment Contract Necessary?

An employment contract is not necessary for every hiring. Most hires are actually conducted through at-will employment agreements, which do not limit the rights of either the employer or employee to terminate the arrangement.

Employment contracts are most often utilized in cases involving:

  • Costly training: If finding and training a replacement employee would be very costly and time-consuming, a fixed term of employment or a notice requirement can provide the employer some protection.
  • Access to sensitive information: If the employee will be dealing with confidential information, trade secrets, client lists, etc. Confidentiality clauses, and non-compete agreements can safeguard this information.

Should I Consult an Attorney?

Consult an attorney before signing or drafting an employment contract to ensure you know what will be expected under the contract. An employment lawyer can help negotiate terms that will benefit you or re-negotiate a contract if either party wishes to change the employment relationship.