Any company or business looking to hire someone might be after an employment agreement template to make the hiring process easier. An employment agreement or contract defines the legal terms between an employee and employer, outlining everything that both parties need to know for a successful working relationship.
If you’re planning on hiring new staff, Incfile’s Employment Agreement sample will help you draft the perfect contract for your business’s employees.
What Is an Employment Agreement?
An employment agreement, sometimes referred to as an employment contract, is a legal document outlining the relationship and expectations between an employer and employee. It’s useful in defining the responsibilities of both parties during the employment period, including important aspects like the role of the employee and the compensation and salary given by the employer in return.
There are no national requirements for an employment contract and a majority of Americans employed on an at-will basis do not have any sort of formal, written contract. However, it can benefit both parties to establish relationship parameters in the form of an official agreement. It can protect the rights of the employee and employer and hold both to account in terms of responsibilities and duties.
Are There Different Types of Employment Agreements?
There are different types of employment agreement templates depending on the type of employment and the various responsibilities and legalities surrounding different types of employees.
The main kinds of employment agreements are:
- Permanent employment contract (full time or part time): These are for employees who work regular, permanent hours or shifts. They are generally paid a salary or set hourly rate.
- Temporary or fixed-term employment contract: For employees who are employed only for a short time or fixed period of time, such as seasonal workers or temporary workers.
- Casual or at-will employment agreement: For employees who are given no set time period for employment and can be terminated at any time with or without warning. It’s estimated that the majority of Americans are at-will employees.
You can also use similar agreements for other types of employment, but they generally have different terms and responsibilities. Other types of employment agreements include:
- Independent contractor agreement: This is for an individual or entity who is paid to perform a certain service over a period of time.
- Internship agreement: This is used when hiring unpaid interns or trainees who agree to work for skill development and on-the-job training related to their studies for little or no compensation.
What to Include in an Employment Agreement
A letter of agreement between employer and employee should include everything that both need to know about their working relationship. While some content within the sections of the agreement will differ depending on the type of employment as outlined above, generally, the sections remain consistent.
The key pieces of information to include in an employment agreement are:
Employment date: the contract becomes effective from the start date
Name of the employer and employee
Position: include the title and description of the employee
Expectations and responsibilities: outline the agreed-upon roles and responsibilities of both parties as part of the agreement
Compensation: include the pay amount, terms of compensation and schedule of payment
Fringe benefits: outline any other benefits included in the employment and the eligibility requirements of the employee
Confidentiality, non-disclosure and intellectual property: legal agreements that the employee needs to abide by during and after employment
Non-compete agreement: outline the restrictions of the employee for working with competing companies after termination
Termination: the terms and reasons for which the employment relationship can be ended by either party
Signatures: signed by both parties in agreement of the document
A probationary period is an optional addition to the employment agreement. A probationary period is a time frame in which the employee is “on trial” and may be terminated if unsuited or inadequate. This is an optional addition to the employment agreement and can be implemented by the employer, if deemed necessary.
Related Agreements and Documents for Employment Purposes
Once you have negotiated the terms with your new employee and drafted an employment agreement using our handy template, there are some other related documents that you should consider. The IRS requires all U.S. companies to get new employees to complete a W-4 Form, which is used to calculate the employee’s withholding taxes.
Other related documents that you might want to draft alongside the employment agreement include an employment offer letter that formally offers the job to the new employee and a compensation agreement that specifically outlines the terms of payment. A compensation agreement can be useful if you intend to amend the pay rate later without having to re-do an entire employment agreement again.
Hiring with Confidence
Whether you’re looking to hire someone in the future or you’re already on the hunt for your next employee, it’s a good idea to have a solid employment agreement. While not legally required, these agreements can help outline the rights and responsibilities of both the employer and employee, providing a sense of clarity and stability.
Our template makes it fast and easy to complete your employment agreements so you have all your ducks in a row and all your documentation in place.
While you’re at it, explore more of Incfile’s lawyer-approved legal documents. Download Incfile’s customizable Employment Agreement template to use as your own formal contract and check out more resources in Incfile’s template library.