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Types of employment contracts and clauses you need to know

On Behalf of | Sep 7, 2021 | Employment Law |

There are risks and benefits for the employer and employee when a company hires an individual. One of the ways that businesses and employees protect themselves from the risks inherent in an employment relationship is through the execution of a contract.

An employment contract makes it clear what obligations a company has to a worker and also establishes specific expectations for that employee. What are some of the forms of employment contracts, and what are some of the more popular additions to employment contracts?

At-will, independent contractor, hourly and salaried workers

There are many different kinds of employment, and the contract a worker executes with a company will reflect what kind of work they accepted with the business.

For example, an at-will employee has no specific time constraints or requirements on their employment. They can work for as long as the arrangements benefit them and their employer, and either can sever the agreement at any time. Independent contractors are technically self-employed, and their contract with the company will outline what work they will do and what compensation they will receive. Their employment will usually only last the duration of a specific project.

Most employment contracts will compensate the worker on a per-hour basis or by offering a salary. Generally, the employer’s contract will outline compensation the worker will receive and what benefits the company offers, in addition to job performance expectations. Workers may need to negotiate specific severance terms. Either party may have an interest in claiming the inventions or original works of the employee, or in the limitation of the employee’s right to act as an agent for the company.

Special clauses or additional agreements

Many workers and companies need protections beyond the most basic available in an agreement to work for a certain duration of time or amount of pay. The company may want to restrict activities to protect itself in the future.

Companies hoping to restrict the future economic activities of a worker may have them sign a non-compete agreement so that they cannot work for a competitor or start a competing business. They may also demand that the worker be their exclusive employee.

Companies with trade secrets that they do not want made public may have workers sign non-disclosure agreements or a confidentiality agreement. Non-solicitation agreements can prevent employees from approaching customers or clients after they leave the company or even trying to recruit their former co-workers to their new place of employment. There may also be an arbitration clause in case there is a future conflict.

Learning more about the kinds of employment contracts and the different inclusions people often add to them can help you protect yourself as a worker or as a business hiring someone new.