Elements to include in an employment contract

On Behalf of | Dec 3, 2022 | Business Law |

An employment contract defines what is expected from both the employer and the employee. It has clear guidelines, eliminating chances of misunderstandings in the future. Thus, you need to create an effective contract for your employees.

To do so, you will include vital aspects to protect the parties involved. Some may vary depending on the type of business, but here are some common ones:

Job description

Write the job description in-depth. Provide a clear definition of the position and employee responsibilities.

Terms of employment

State if the position is part-time, contract, full-time or project-based. You may also discuss the employee’s schedule, including work hours and working days.

Compensation and benefits

Your contract should include the position’s annual salary or hourly rate and the bonus structure. You can include benefits like health, disability, workers’ compensation and life insurance, retirement plan, company stock options and so on.

Sick days, vacation days and other paid time off

Discuss how many sick days an employee gets and how vacation days and other paid time off can be accrued. Additionally, you can explain the approval process for vacation days.

Dispute resolution

A misunderstanding may arise between you and the employee or among colleagues. You need to draft resolution methods that will be applied when need be.

Confidentiality clause

Your contract should be clear about the employee not sharing the company’s secrets and using its intellectual property during employment and after termination.


You or the employee may decide to terminate the employment. Discuss what is required from both parties if it happens. Include the amount of time needed to present a written notice, severance payments and restrictions for the employee.

For a contract to be binding, you should be informed about critical elements to include. It will help to seek legal guidance to create successful contracts.