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.
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Last Update July 15th, 2024
Also Known As
Work Contract
Job Agreement
Employee Agreement
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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:
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:
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.
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:
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.
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. |
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:
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.
Other important forms are essential for business operations. If you need to create another legal document, try one of our expert templates:
Creating a secure and legally effective Employment Contract involves many details. Learn about key elements in these contracts by reading our FAQs below.
In an Employment Contract, the 2 main parties are the employer and the employee, where the employee provides services in exchange for payment.
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.
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.
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.
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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