Contract of Employment Information

A contract of employment is a legal agreement between an employer and an employee setting forth the terms and conditions of the employment arrangement.

Distinction

It differs from an "at will" employment arrangement because it is controlled by contract law. The parties to a private contract, including a contract of employment, have full discretion in determining terms and conditions included as long as the arrangement meets the minimum standards of a contract as defined by Nolo Press in 2008. One, the parties must be in agreement and two, consideration must be exchanged. In an employment contract that consideration is typically cash wages or equity for work performed.

History

Although a verbal contract can be legally binding most parties choose to document a contract of employment. According to the legal experts at the Society for Human Resource Management (SHRM), certain provisions are considered standard for employment contracts.

Features

The term of the contract include the start date and end date. If the contract is eligible for renewal, the method and circumstance for renewal might be listed. Specifics on the work to be performed should be detailed. Include things like key responsibilities, reporting requirements, location of work performance, evaluation metrics and customer assignments. If the contract allows for early termination based on a breach of its terms or conditions, then acts or omissions of breach should be defined clearly. Consideration, typically including cash compensation and benefits, should be stated. Be clear on whether pay is periodic or milestone-based and any tax implications, including withholdings.

Suggestions

Other sections of the contract of employment may cover areas like the obligation of confidentiality, non-compete, choice of law and/or venue and notice requirements.

Considerations

A key tenant for any employment relationship, including any contract of employment, is that the relevant state and federal laws governing employment be met. For example, the Fair Labor Standards Act (FLSA) is a federal law that covers a variety of items including minimum wage. If the FLSA applies, then the parties to a contract of employment are not empowered to make an agreement that violates such rules.

References

• Society for Human Resource Management
• Nolo Press
• Federal Labor Standards Act