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Employment Contract

Updated on: Oct 12th, 2021


5 min read

Onboarding of a new employee involves a lot of documentation. Employee contract is one such written document between the employer and the employee that defines the rights and responsibilities between the two. It is generally made for management or senior level employees who are involved in business strategies and have access to sensitive information.

An Employment Contract consists of the following information :

  • Compensation details: This is the salary details of the employee. It also contains the details of benefits offered by the company in addition to salary. For example- medical insurance, vacation and sick leaves, expense reimbursements etc.
  • Duration of employment: An employee may be hired as an ongoing employee or only for some specific duration. An employment contract specifies the duration for which an employee is hired by the company.
  • Designation: It specifies the designation of the employee such as Manager, Executive, Vice President etc. and the department he or she works in.
  • Role & responsibilities: An employment contract also specifies the scope of work for the employee. It outlines the responsibilities and tasks to be performed by the employee.
  • Confidentiality: An employment contract may contain the confidentiality clause especially when work involves dealing with sensitive information. This clause prohibits the employee from disclosing such information outside of work.
  • Non-Competition Clause: Though this clause requires separate agreement, it may be included in the employment contract also. It prevents the employee from doing business or activity which is competitive with the company’s business or services for a specified duration after the termination of the contract with the company.
  • Notice for Termination of the contract: It specifies the duration of the notice period to be served in case of termination of the contract by the employee. It also mentions the circumstances under which the company can terminate the contract without prior notice to the employee.

An employment contract must be signed by both the parties. It serves as an important document to settle disputes that may arise between the employer and the employee.

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Quick Summary

Employee contract outlines rights, responsibilities, confidentiality, and termination terms. It includes compensation, duration, designation, role, confidentiality, and non-competition clauses. Crucial for both employer and employee.

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