Employment Agreement

What Is an Employment Agreement Contract?

An employment agreement (also known as a work agreement contract) is a formal contract between an employer (a person that hires) and an employee. This document outlines the roles, responsibilities, compensation, and expectations of both parties.

Contract agreement for employment could be used for different types of businesses and various jobs. This legal document helps:

• to define legal clarity for both parties;
• to protect an employee in the course of employment relations; and
• to prevent potential disputes.

While employment contract agreements may differ depending on the type of business and job position, all employment agreement samples are aimed to include the following key terms:

• payment terms (e.g., salary, annual bonuses, compensation for travel expenses);
• duration of employment;
• job description (i.e., what is expected from an employee);
• additional perks (e.g., insurance, paid sick leave);
• restrictive covenants (i.e., protection of employer’s trade secrets); and
• termination of employment (i.e., in which case either party can end the employee agreement).

A work agreement contract is a written contract that could be in the form of a letter or in the form of a typical contract.

Employment Agreement vs. Offer Letter

An offer letter is aimed at offering a job position. A candidate can either decline or accept such a letter. An offer letter is legally binding for an employer, but not for an employee. Once an employee accepts such a letter, the parties can start discussing an employee agreement template. After an employment agreement is signed, the employment relationship between the parties starts. From the moment of signing an employee agreement template, this document becomes legally binding for both parties.

Employment Agreement vs. Contract for Freelance

An employment agreement should not be confused with a service agreement or a freelance contract. Under a service agreement, the work is being performed by a freelancer. A freelancer is also an independent contractor who independently decides how and when the work should be done. In an employment agreement, an employee is subordinate to the employer. Unlike in service agreements, in employment relations an employee should follow a strict working schedule and hours.

Different Types of Employment Contracts

The best way to define an employment agreement’s nature is to look into its types. There are several types of employment contracts based on job type, duration, and structure.

• Permanent Employment Agreement

This is a standard full-time or part-time contract agreement for an employee, offering a long-term job. This is a type of written contract that does not have an end date. It means that it will last until terminated by either party. This type of contract is also known as an at-will employment agreement.

• Fixed-term Employment

An employee agreement is signed for a specific period of time. The duration of employment in that case can vary between a few months and a few years. The text of an employment agreement template has an end date when the employment relationships between the parties should end.

In most cases, this type of employment agreement may contain an automatic prolongation clause. If there is a prolongation clause, a contract is being prolonged automatically for the same period of time unless terminated by either party.

• Full-time Employment 

The full-time contract template requires the employee to work at least 40 hours per week. In employment law this is known as a full-time job. State laws, regulations, and types of jobs may affect how full-time work is determined.

• Part-time Employment

This type of employment agreement requires an employee to work 20 hours or less per week. This type of employment relationship allows individuals to take up two or more jobs at the same time.

• Remote-work Employment Agreement

This type of work agreement contract is known for its flexibility, as it allows employees to work from home or any other location of their choice. Remote workers can have full-time or part-time employment under permanent or fixed-term contracts.

Who Needs an Employment Contract Agreement?

Anyone who runs a business, hires people, or is simply looking for a job may need an employee agreement template.

• Business owners. To help to grow their business or to keep their staff from going away, having a solid employment agreement sample is a must.
• HR managers. They manage multiple hires that could be challenging. This is where a standardized employment contract agreement should help to navigate this process with ease.
• Employees. They are searching for a good employment contract sample to protect their future.

What Should Be Included in a Work Agreement Contract?

Every well-drafted work contract agreement template should include the following elements:

Job Description

A scope of work and an employee’s role should be defined from the very start. It helps to structure the working process and to define subordination as well as makes it easier to evaluate an employee’s performance.

Payment Terms and Benefits

This is a key element for every employment contract template. The employee’s salary should be stated in the text of the employment agreement, along with the period for which it should be paid. For example, “USD XX,XXX per year” or “X,XXX per month.” It is also crucial to state if the indicated salary is before (gross) or after (net) taxes. If the salary given in a work agreement contract is a gross salary, an employee should be able to calculate the actual payment he or she will receive after taxes.

If you are planning to hire a foreign employee, make sure you are both clear about the currency in which such a remuneration should be paid.

Do not forget to state the exact “paid time” an employee should receive their remuneration—i.e., the date of a month (for monthly salaries) or the day of a week (for weekly salaries).

When setting up a salary in an employment contract sample, take into consideration the minimum federal wage rate, which is USD 7.25 per one hour of work in 2025. Do not forget to check the laws of a state where your business is currently based, as some states may establish higher minimum wage rates.

Working Schedule

A good employment contract sample should also define which days and which hours within the week an employee should work. It is also vital to mention the holidays that a company observes as well as normal weekly days off.

Terms and Conditions of Work

This is a set of rules an employee should follow while working within the company, for instance:

• discrimination policy (employees should refrain from discriminating against each other based on race, sexual orientation, gender, etc.);
• harassment policy (no harassment or bullying at the workplace);
• dress code policy (e.g., employees should avoid wearing certain types of clothes);
• late arrival policy (employee should arrive to work and leave their workplace at specific hours).

Every company is different; thus, the list of policies and rules an employee should adhere to may differ.

Termination of Employment

Every employment agreement should have a termination clause. This clause sets up a notice period either party should follow to terminate the contract. Since federal and state employment law protect employees, an employer can fire an employee in specific circumstances. Those circumstances may include poor performance or poor discipline, bullying or harassment cases, etc.

This clause aims to protect an employee against wrongful termination or termination without cause.

Protection of Confidentiality

At work an employee may have access to sensitive information about their employer or the employer’s business. That’s why some employees might be required to sign an additional non-disclosure agreement. In that case an employee undertakes to keep secret a specific list of information about the employer or the employer’s business. The duty of non-disclosure remains effective throughout the whole duration of employment relations and for a certain period after termination of employment.

Non-Compete Agreements

A non-compete agreement restricts an employee from competing with their former employer after the termination of employment relationships. Usually the basic employment agreement template does not contain such a limitation by default. Non-compete agreement are only applicable to employees who hold managerial positions within the company.

Signatures of the Parties

An employment contract sample becomes a legally binding agreement after being signed by both parties. It does not matter if signing takes place on the same date or on different dates. A party can put their signature either by hand or via special online tools.

It is also a good practice to make two signed copies of the employment agreement. One copy should be kept with the employer, and another one is for the employee.

Many companies prefer starting with a sample employment contract agreement template that covers these areas and can be tailored as needed.

Get Your Employment Agreement Template in Word or PDF

You can easily generate an employment agreement sample at FasterDraft. Follow those simple steps below:

• Click on the button “Create Document.”
• Answer a few simple questions in the questionnaire.
• Select a format for an employee work contract template—PDF or Word.
• Add an e-signature (optional).
• Make a payment.
• Your employment agreement template is ready to be used.

This professionally written employment contract sample is ideal for small businesses, HR departments, and freelancers who need clear, structured, and legally sound contracts.

We always recommend contacting your employment contract lawyer for any clarifications about the usage of this template.