Employers want contracts that will protect them and their business while ensuring that the working terms and conditions are suitable for their employees. This is because when both parties are equally served and satisfied, the company is likely to prosper because they will all do their best to achieve the set goals. Therefore, having an employment contract gives the basic understanding of what each party should expect from the other. The relationship between the employer and employee is spelled out in details, and it is more than a standard employment agreement. Below are some of the elements of an employment contract.

Components of an employment contract

The position of the employee

An employment contract should have the details of the job description of the prospective employer as well as the position they hold in the company and what their duties and responsibilities will entail. The place that the job will be carried out should also be specified as well as the working times. The language should be straightforward leaving no room for second-guessing for the contract to be efficient.

Employee’s benefits

An efficient contract should have the employee’s benefits in it. The benefits include health, dental, and the insurance being offered in addition to other basic packages. In addition to that, the percentages of benefit premiums that the employees have to pay should be stated. Other items like holidays, vacations, the profit sharing that the company offers and the retirement packages a company gives to their employees should not be left out.

Compensation of the employees

The first thing that employees subconsciously look at when they receive their contact is their compensation. Therefore, it is a fundamental element in the contract. The salary should be put in figures in the contract, and it should include the base wage and the direct means of payment. Specifications as to whether the payment is a standard salary or it is being paid in a commission or on an hourly basis are necessary. Also, the overtime policies should not be left out.


Many employees will barely want to look at this section of the contract, but it is equally of paramount importance. It is not a pleasant thought, but it must be covered. This section should explain what happens when an employee has to leave the organization with or without cause. Therefore, both scenarios should be defined as well as the cover terms that apply to it. That will help to avoid future problems when the employee has to leave the organization.