What Is a Contract of Employment?
An employment contract is a signed agreement between an individual employee and an employer or a labour union. It establishes both the rights and responsibilities of the two parties: the worker and the company.
While usually a written document, these agreements can also be verbal. The terms of the employment contract may include the following:
- Commencement date
- Job title and description
- Duration of employment
- Employee compensation and benefits
- Employer’s rules, regulations, policies, and practices
- Confidentiality agreement
- Non-compete clause
- Resolve dispute
- Termination of Employment
- Any other general provisions
Why Is an Employment Contract Important?
A well-written employment contract is beneficial for both an employer and an employee. It will:
- Help clarify job duties
- Spell out the rights of each party
- Give the employee better job security
- Protect company information, like special techniques and trade secrets
Types of Employment Contracts
Types of employment contracts refer to the different contract arrangements an employer can establish when hiring an employee. The type of employment contract you need depends on the type of work you need from any employee and how you structure your employee contracts. There are four main types of employment contracts employers use when hiring and setting the terms of employment with a new employee:
At-Will Employment Contracts:
- At-will contracts mean employees can be fired or quit at any time, without notice.
- Employers cannot fire employees for protected reasons such as protected classes, discrimination, or retaliation.
- At-will employment does not prevent employees from enforcing the terms of their contract.
Written Employment Contracts:
- More detailed than at-will contracts.
- Details specific employee and employer obligations
- Written employment contracts generally run for a specified time decided upon by the employer.
- Written employment contracts outline the terms of termination, and the employees cannot be terminated unless they violate their employment contract terms.
Oral Employment Contracts:
- Employment can either be At-Will or based on specified terms.
- These contracts are legally binding but present difficulties if there is a breach of contract as they are difficult to prove.
- If the contract is breached, the oral employment contract is enforced based on any available documentation, surrounding circumstances, evidence of the agreement, and the reliance of the employee and employer.
Implied Oral Contracts:
- These contracts have no formal documentation and can combine both- oral and written statements.
- When considering implied oral contracts, courts take into consideration employee performance within the company and how long the employee worked for the company in question.