What is an Employment Agreement?

An employment agreement is a contract between an individual employee and an employer or an organization. It covers rights and responsibilities of both the parties: the employee and the company.

Points to be included in an employment agreement

This agreement with employee covers the working relationship of a company and an employee. It is prepared for both the parties to clearly understand their responsibilities, obligation and the terms & conditions of employment.

Specifically, Agreement with a Employee includes the following details:

• Salary or wages: Agreement should specifically mention the gross salary and applicability of various tax and other relevant laws.
• Schedule: In most of the cases, an agreement with employee should include the days and hours an employee is expected to work.
• Duration of Agreement: Agreement should specify the length of time the employee agrees to work for the company. It can be ongoing period of time, specific duration or minimum duration.
• Job roles and responsibilities: Agreement should list all the duties and tasks an employee is expected to fulfill while employed.
• Confidentiality: Although the company can make employee sign a separate non-disclosure agreement, the agreement should also clearly mention the basis of confidentiality.
• Leave: An agreement should clearly mention the number of leaves that an employee is entitled to receive. Generally, the details on sick leave, casual leave, maternity and paternity leave are laid out.
• Future competition: In most of the cases an employment agreement includes a noncompete clause or (NCC). This is a clause stating that, upon leaving the company, the employee will not enter into jobs that will put them in competition with former company.

Pros and Cons of an Employment Contract

Pros of an Employment Contract:

• Clear definition of roles
• Protection of both parties
• Stability in a company

Cons of Employment Contract:

• Reduces flexibility
• Legally binding upon non-compliance
• Can be changed only with renegotiation

Sample of Employment Agreement