Do You Need to Use Employment Contracts?
Written by Law on Call Staff | Reviewed by Nathan Askins | Last Updated October 10, 2025
Hiring employees can get messy if expectations aren’t defined. Onboarding works best when everyone starts on the same page—literally.
With the right employment contract, you’ll prevent disputes and build trust from the start. Here’s what to know about employee contracts and how to make them work for your business.
Main Takeaways
- Employment contracts clearly define duties, pay, policies, and responsibilities.
- Include job details, compensation, employment terms, intellectual property clauses, confidentiality, and policy references.
- Keep contracts clear, specific, compliant with local laws, and updated regularly.
- Templates are useful as a starting point, but adjust them to your needs and consult a lawyer for complex roles.
What Is an Employment Contract?
An employee contract is a written agreement that spells out the terms of the working relationship between an employer and an employee. At its core, it covers any essential details that help both parties understand the terms of employment.
Having an employment agreement ensures everyone’s seeing eye to eye, and offers legal clarity if issues arise. Whether it’s a full-time hire, part-time help, having that written agreement helps set boundaries and protect your business interests.
Why are contracts of employment important?
A handshake may seal the deal in spirit, but an employee contract seals it on paper. By writing down expectations and responsibilities, you make sure everyone knows exactly what’s expected from day one.
Do You Really Need Employment Contracts?
The short answer: usually, yes. Not every state or industry legally requires a written employee contract, but having one almost always works in your favor. A signed agreement creates a clear record to keep expectations and responsibilities from getting muddled later on.
Even if you operate in an “at-will” state where employment can be ended anytime, contracts still add value by putting expectations in writing. For more complex roles, like those involving intellectual property, equity, or sensitive client relationships, a contract is essential.
If your business relies on trust, clarity, and compliance (like most do), an employee contract will keep everyone aligned.
Key Components
A strong employment contract typically includes:
- Job title and description. Clarify the position and responsibilities so expectations are crystal clear.
- Compensation and benefits. Include salary or hourly rate, pay schedule, bonuses, vacation, sick leave, and other perks.
- Employment status and term. Indicate whether the role is full-time or part-time, exempt or non-exempt, and include the start date (with end date, if it’s a fixed term employment contract).
- At-will statement or termination terms. Although at-will employment is the default in most states, it’s best to specify that employment may be ended by either party at any time.
- Confidentiality and non-compete clauses. Protect sensitive business information and limit competitive activity where allowed by law.
- Intellectual property (IP) ownership provisions. Clarify who owns work created during employment, including designs, code, or marketing materials.
- Policies and procedures. Reference company handbooks and workplace rules, including conduct, remote work, or social media policies.
- Signatures. Both parties must sign and date the contract for it to be valid.
Tips For Writing an Employee Contract
To make the most of your employee contracts:
- Customize for Each Role
Personalized agreements are more effective than one-size-fits-all templates. Adjust terms to fit the responsibilities, work style, and level of each role. - Use Plain Language
Avoid jargon or legalese. Clear, conversational wording builds trust and understanding. - Stay Compliant with Local Laws
Employment rules vary by state. Make sure you follow regulations on overtime, sick leave, and non-compete agreements. - Review and Update Regularly
Laws and business needs change. Update contracts at least once a year or whenever policies change. - Include a “Talk to a Lawyer” Prompt
For positions with sensitive IP, equity, or senior-level responsibilities, it’s wise to have both parties get legal advice before signing.
Know what you’re signing before you sign.
Employment Contract Types (With Templates)
Each type of employee contract or addendum looks different, depending on the role and the risks involved. (An addendum supplements a standard employee contract, adding specific terms about an aspect of the role.)
A basic contract might outline pay, duties, and at-will status, with a remote work addendum covering home-office logistics and security. A confidentiality and intellectual property addendum skips things like salary, since it’s usually signed in addition to a basic employment contract. At the other end of the spectrum, executive agreements may include bonuses, severance, or non-competes that wouldn’t belong in an agreement for hourly staff.
Below, you’ll find a contract and addendum templates customized to different situations. They’re designed as a starting point—adapt them to fit your business, location, and jurisdiction.
Basic agreement template
Covers key terms like compensation, duties, and termination. Perfect for entry-level or hourly staff.
[Company Name] Employee Agreement
Employee Name:
Job Title:
Start Date:
Compensation
- Salary / Hourly Rate:
- Pay Schedule:
Employment Terms
- Employment is at-will. Either party may terminate employment at any time.
- Work schedule:
Job Duties & Expectations
- Employee will be responsible for the following:
Confidentiality
Employee agrees not to disclose company information to third parties.
Signatures
_________________________ (Employer)
_________________________ (Employee)
Date:
Remote work addendum template
Focuses on ownership of work and nondisclosure agreements.
Remote Work Agreement
Employee Name:
Job Title:
Eligibility and Approval
Employee is approved to work remotely [full-time / part-time].
Job Duties & Expectations
Employee’s core job duties remain as set forth in their primary employment agreement. This addendum adds the following remote work requirements.
Equipment and Technology
- Employee will use company-provided equipment or approved personal devices.
- Employee is responsible for maintaining security, passwords, and VPN access.
Communication & Availability
- Employee will be available during [core hours / agreed schedule].
- Weekly check-ins with manager:
Performance & Monitoring
Employee agrees to complete assigned work on schedule.
Signatures
_________________________ (Employer)
_________________________ (Employee)
Date:
Confidentiality/IP-focused addendum template
Focuses on ownership of work and nondisclosure agreements.
Confidentiality and Intellectual Property Agreement
Employee Name:
Job Title:
Scope
This agreement does not alter the employee’s job duties or compensation, which remain governed by their employment agreement.
Confidentiality
- Employee will not disclose company information to third parties.
- Confidential information includes [trade secrets, client lists, marketing plans, etc.].
Intellectual Property
- All work created during employment belongs to the company.
- Employee assigns any IP rights to the company.
Non-Compete / Non-Solicitation
Employee agrees not to compete with the company or solicit clients for [duration, region, as legally permitted].
Duration
Confidentiality obligations continue after employment ends.
Signatures
_________________________ (Employer)
_________________________ (Employee)
Date:
Executive or senior role agreement template
Includes bonuses, severance, and performance review clauses.
Executive Employment Agreement
Employee Name:
Job Title:
Compensation
- Base Salary:
- Bonus Structure / Equity:
Job Duties & Expectations
Employee will perform executive responsibilities consistent with their role, including leadership, strategy, and management duties as directed by the Board or senior leadership. Duties may evolve with company needs.
Performance & Reviews
- Performance goals:
- Review schedule:
Severance / Termination
- Terms of severance:
- Termination notice:
Confidentiality & IP
Employee agrees to maintain confidentiality and assign IP rights to the company.
Non-Compete
Employee will not engage in competitive activity as permitted by law.
Signatures
_________________________ (Employer)
_________________________ (Employee)
Date: