An employment agreement is a written contract between the employer and the employee that lists the terms, conditions, and obligations for each party during their working relationship. Employers and employees usually sign the employment agreement after the employee accepts the job offer, before their first day of work.
What is the difference between an employee agreement and an employee contract?
Both the agreement and the contract require two or more parties to agree to certain responsibilities. But while contracts are legally enforceable and contain terms and regulations, an agreement is simply an understanding of rights and obligations.
What does an employee agreement contain?
The employee agreement, which requires all necessary parties to sign and acknowledge, includes:
- Job title and explanation of role
- Benefits (supplemental benefits, global benefits, and more)
- Work schedule (hours, days, overtime, etc.)
- Leave policies (maternity leave, bereavement leave, unlimited leave, and so on)
- Non-compete terms (a set amount of time that needs to pass before an employee can work for a competitor following termination)
- How to handle confidential information (intellectual property, stock information, etc.)
- Termination stipulations
What are the advantages and disadvantages of an employee agreement?
An employee agreement aims to protect the employer’s confidential information and ensure employees meet certain standards when it comes to their behaviour and work. Agreements can also signal to potential employees that employers will need to uphold specific standards and provide a level of stability.
A downside of employment agreements is that employers can’t change the terms of the agreement as they wish. The only way to alter the conditions is to renegotiate the terms with the employee, which depends on the employee’s approval.
What are the different types of employment agreements?
Employment agreements don’t just cover full-time employees. Employers can have agreements for any of the following:
- Permanent Employment Agreement: This agreement is for a position with no set end date. It will include the terms and conditions of employment, such as benefits, responsibilities, termination policy, and more.
- Fixed-Term Agreement: Employees who sign this work for a specific amount of time or per project. The agreement will state the start and end date of the working relationship. This type of agreement is typically used for seasonal employees, temporary roles, or when additional talent is needed for a set period.
- Part-Time or Reduced-Hours Agreement: This agreement is for employees who work fewer hours than full-time professionals. The agreement will specify the number of hours, work schedule, and benefits (if applicable).
- Zero-Hour Agreement: Zero-hour contracts are for employees who work when work is available. In zero-hour agreements, an employer agrees (either in writing or verbally) to offer work when it’s available and the employee agrees to remain on call.
- Freelance or Independent Contractor Agreement: Freelancers or independent contractors sign agreements that outline the scope of work, deliverables, and payment terms.
- Probationary Agreement: Many companies use this agreement when they want to assess the employee’s performance during a set amount of time. It might include performance benchmarks or goals the employee must reach to obtain permanent employment.