Employment Contract

Before officially starting working, an employment contract must first be in place. This way, both the employer and employee understand the terms and conditions of the job. 

What Is A Contract Of Employment?

An employment contract is usually a signed agreement between the employer and the employee. It defines the working relationship and details the rights and responsibilities of both parties. To keep a record of things, both the company and worker usually have a physical or digital copy of the document. However, an employment contract can also be a verbal agreement. 

What Should Be Included In The Contract Of Employment?

The terms and conditions depend on various factors, but in general, they include the following:

  • General responsibilities of the employee, which points to their role and specific tasks. These may be under their job title and description. 
  • Compensation, which can be in the form of salary, compensation, or hourly rates. 
  • Benefits other than the compensation. This may include health insurance, childcare, etc. 
  • Duration of employment indicating the start and end dates of the working relationship.
  • Schedule for the days and hours the employee is expected to work. 
  • Rules and policies of the company. 
  • Confidentiality, though the company may have prepared a separate non-disclosure agreement. 
  • A non-compete agreement that prevents the employee from competing with the company (ie. joining a competitor company) after the termination of employment. Often, this agreement lasts for a couple of years after leaving the company. 

Should the terms and conditions change, the contract of employment must be updated as well. 

What Is The Importance Of An Employment Contract?

The employment contract is a legally binding document that protects the welfare of both the company and the worker. Specifically, it is important because it:

  • Defines what’s expected of the employee (ie. their tasks and responsibilities) and employer (ie. the compensation they need to provide)
  • Protects the assets of the company
  • Provides better job security to the employee 

Are There Drawbacks To Having An Employment Contract?

Generally, a contract of employment benefits both parties. However, some employees see these agreements as rigid. For example, should they later find that the job doesn’t suit them well, they cannot just stop working altogether. The contract is legally binding and leaving under unacceptable terms can be considered a breach of contract. 

Hence, employees must read everything thoroughly before signing. Likewise, the employer must highlight the important points and encourage inquiries should there be concerns. Being diligent and cautious helps both parties in the end - the company finds the best talent and the employee finds the job that best suits their skills and preferences. 

Types Of Employment Contract

To put things in black and white, the practice is to have a formal contract of employment in physical or digital copy. Still, there are other types of employment contracts, including:

At-Will Contract

An at-will agreement stipulates that the employer can terminate the employee for any or no reason at all. Employees can also terminate the working relationship without providing notice. 

Verbal Contract

As opposed to a written contract, a verbal agreement determines the terms and conditions of employment through oral communication. Note that a verbal contract can change the at-will status of the employment as it can also be legally binding. However, it can be very challenging to prove the terms and conditions enclosed in a verbal agreement. This is the reason why companies see to it that their employment contracts are signed documents. 

Implied Contract

An implied contract is an agreement resulting from the actions or circumstances of the parties involved. One important thing to note about implied contracts is that they can be unwritten and non-verbal but legally binding nonetheless. 

For example, a customer enters a hair salon and receives a haircut. Despite the lack of discussion, it is implied that the stylist will provide their services and the customer will pay for them. 

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