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Employment Contract


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Last Updated April 12, 2024

What is an Employment Contract?

An Employment Contract is a contract used to establish the rights, responsibilities, and obligations of a working relationship between an employer and an employee.

An Employment Contract involves:

  • An employer, who can be a person or an entity (an organisation or a corporation, for instance) and who is hiring another person to work for them
  • An employee, who is normally a person as opposed to an organisation or a corporation and who is being hired to work for an employer

An Employment Contract is also called a/an:

  • Employment Agreement
  • Employee Contract
  • Job Contract
  • Job Agreement

If you are being hired to work for someone as an independent contractor as opposed to an employee, you should use an Independent Contractor Agreement instead.

What information is included in an Employment Contract?

Generally, an Employment Contract will include:

  • The employee's name and contact information
  • The name of the employer (who can be an individual, organisation, or corporation, depending on the situation) and their contact information
  • The place of employment's address or addresses
  • Particulars about the position, including job title and description, the average number of hours the employee will work, when the position will start, whether the position is permanent or temporary, etc.
  • Details about pay and benefits, including remuneration type (e.g. salary, hourly, etc.), pay period (e.g. weekly, fortnightly, etc.), rate of pay (e.g. $25 per hour, $75,000 a year, etc.), annual vacation time, and other benefits (such as paying toward a superannuation fund)
  • Technicalities regarding termination notice (the amount of notice that will be required by the employer to terminate the employee and vice versa)

Often, an Employment Contract will also include specific clauses restricting certain conduct during or after employment, such as:

  • Confidentiality clause: this clause helps employers keep confidential information private by prohibiting employees from inappropriately using or discussing company secrets, business strategies and plans, product information, and more
  • Non-solicitation clause: this clause prevents employees from encouraging coworkers to work for a new organisation
  • Non-compete clause: this clause stops employees from working for direct competitors during or after employment; to be enforceable, the terms in a non-compete clause, sometimes called a non-competition clause, must be reasonable (e.g. using a reasonable time period, using a limited and reasonable geographical location, etc.)

What is the difference between a full-time and part-time employee?

In most cases, an employee is classified as full-time or part-time:

  • A full-time employee is generally defined as someone who works approximately 30 hours or more a week. They are typically given benefits (such as a health and dental package) that other employees may not receive.
  • A part-time employee is generally defined as someone who works less than 30 hours a week with a guaranteed minimum number of hours (e.g. they typically work 15 hours a week).

Notice is generally required to terminate a full or part-time employee.

A person can also be hired as a casual employee (someone who is not expected to work a set number of hours per week and who only works when needed). Notice may not be required when terminating a casual employee.

What is the difference between a permanent and temporary employee?

Generally, an employee will be hired on a permanent or temporary basis:

  • A permanent employee is an employee who has been hired indefinitely, meaning they do not have a predetermined end date in their Employment Contract.
  • A temporary employee is an employee who has been hired for a specific period of time, meaning an end date has likely been included in their Employment Contract; a seasonal employee (a person who is hired for a particular period or season, like the summer season) is a type of temporary worker.

You may also see someone get hired as a contract worker. Typically, a contract worker refers to an independent contractor or subcontractor, which means an Independent Contractor Agreement will be used to outline the working relationship instead of an Employment Contract.

Related Documents:

  • Employment Offer Letter: Use an Employment Offer Letter to extend an employment offer, including conditions like start date and hourly rate, to a potential new hire.
  • Employment Termination Letter: Send an Employment Termination Letter to an employee to formally advise them that they've been terminated from their position.
  • Employee Evaluation: Create an Employee Evaluation to review an employee’s performance and advise them of any areas for improvement.
  • Resignation Letter: Send a Resignation Letter to an employer to formally advise them that you will be ending your employment with their company.
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