Before you can bring a new employee onto your team, you need to make sure that you're on the same page about what the working relationship will look like. You will need to outline the employee's duties and responsibilities, their compensation and benefits, how and when the employee may be let go, and other important details that will define their time working with you. All of this information should be contained in a contract of employment that a company representative and the employee will sign before the employee starts to work.
What is a contract of employment?
A contract of employment is a document that outlines your expectations for your new employee and explains what they can expect from you, the employer. It is a legally binding agreement that helps your employees understand the standards they need to meet while working for you and how they will be compensated for their work. It reduces your employment liability risks and is crucial for providing written proof if either party fails to uphold their end of the agreement.
Every person who performs work for your company, from employee to contractor, should sign an employment contract.
One platform to grow your global team
Hire and pay talent globally, the hassle -free way with SkuadTalk to an expert
Working from home avoids commuting, and fewer commuters result in
lower greenhouse gas emissions.
Types of employment contracts
Though the specifics of every employment arrangement are different, there are standard agreements for the most common types of employment. Below you'll find a sample letter of agreement between employer and employee for each common type that you can adapt to your needs.
Permanent employment contract
Use a permanent employment contract for employees who are salaried or paid hourly, work part-time or full-time, and whose employment status will be active until either you or the employee terminates it. Because of variations and nuances in state employment law, it can be easy to misclassify an employee as an independent contractor, so make sure to use the proper classification.
Click here to see a sample permanent employment contract for hiring locally.
Hiring employees globally? Use an international employment contract template.
Click here to see a sample permanent employment contract for hiring globally.
Temporary/fixed-term employment contract
Use a temporary or fixed-term employment contract for full- or part-time employees whose work is intended to end after a set period of time. That time can be defined before the employee begins their work, but it does have to be.
Click here to see a sample temporary/fixed-term employment contract.
Executive employment contract
Use an executive employment contract to enter into a work agreement with an executive-level employee or shareholder. These executives are usually highly compensated and the agreement may involve negotiations, sometimes with legal input, before it's finalized.
Click here to see a sample executive employment contract.
Freelance employment contract
Use a freelance employment contract to hire a self-employed individual for a specific project or function within your business. These workers usually set their own rates, hours, and ways of working, but specific requirements vary by state.
Click here to see a sample freelance employment contract.
Independent contractor agreement
Use an independent contractor agreement to hire a worker to perform services for your company. Independent contractors are not employees, and therefore are not on your payroll and do not receive statutory benefits. They are in full control of their business and how they complete their work.
Click here to see a sample independent contractor agreement.
Important terms to include in employment contracts
Employee – A person being hired for full- or part-time, salaried work
Contractor – A person being contracted to perform services
Employer – Your company
Position – The employee or contractor's title (if applicable) and a description of their duties and tasks
Start Date – When the employee or contractor will begin their work for you
Term – The length of time that the employee or contractor is expected to work (use "indefinitely" if there is no fixed end date)
Termination – How and the reasons why the employment agreement may end, whether fixed or at will
Compensation – The amount of money that the employee or contractor will receive, including any overtime, bonuses, or commission, and the payment schedule
Benefits – Any non-compensation perks the employee or contractor will receive, including health insurance, vacation, sick days, paid time off, and/or parental leave
Work for hire clause – States that your company owns any materials that the employee or contractor may create in the course of their work for you
Agency Provision – States that the contract does not allow the employee or contractor to enter into an agreement on behalf of your company
Restrictive covenants in employment contracts
Restrictive covenants are designed to protect your company's intellectual property and secure sensitive information that an employee or contractor may learn in their work for you. There are several clauses you can use to protect your company, each tailored to specific situations that might arise. The most common are:
A confidentiality clause or non-disclosure agreement allows an employee or contractor to work for other companies besides yours but restricts what they can share with those companies. This legally protects your intellectual property and other sensitive information.
A non-compete clause states that an employee or contractor may not work for another company that is considered a competitor of your company for a specified period of time. It also prohibits the employee or contractor from offering similar products or services in the same field for a set period.
A non-solicitation clause states that an employee or contractor may not try to steal clients and/or workers from your company once their employment contract has ended. This aims to protect the company's interests without barring the employee or contractor from working in the field.
The stakes are high with employment contracts, so it's important to make sure that you fully understand the legal requirements of the location you are hiring in and the type of position you are hiring for. Your contracts need to be comprehensive and clear to cover the breadth of situations that might arise between you and your employees and to ensure a smooth, effective working relationship. Each sample letter of agreement between employer and employee above should start you off on the right foot.
How Skuad can help
Skuad is a global employment and payroll platform that enables organizations to hire full-time employees and contractors in more than 160 countries without setting up subsidiaries or legal entities. Skuad’s platform also helps organizations onboard talent, manage payroll, and ensure compliance with country-specific employment laws and tax regulations.
To learn more about Skuad, book a demo today.
1. How to write a letter of agreement between employer and employee?
To write a letter of agreement between an employer and employee, start by clearly stating the terms and conditions of employment, including job responsibilities, compensation, and benefits. Use clear and concise language, and include any important legal language or requirements. Finally, make sure both the employer and employee have reviewed and agreed to the terms before signing and keeping a copy for their records.
2. What is an employment agreement letter?
An employment agreement letter is a legal document that outlines the terms and conditions of employment between an employer and employee. It typically includes details such as job responsibilities, compensation, benefits, and any important legal requirements or restrictions.
3. What is standard employment agreement?
A standard written employment agreement addresses the legal name of the employer and the employee. The position that the employee will hold, the duties and responsibilities of the employee, outlines the place and hours of work, compensation, benefits and any important legal requirements.
(Sample employment letters were developed using the employment contract templates at LegalTemplates.net.)