The Advantages of Having an Employment Agreement

Employment agreement or contract is vital in business especially if it is fully understood and abided. It displays trust and assurance between employers and employees, which are the foundation of a healthy business and strong relationship.

Also, through the agreement, higher executives may protect intellectual property, since workers are prohibited from disclosing any private information.

Meanwhile, employment agreement must not be discriminatory in a way. The gender, race, religion, age and national origin or color must not be a basis when drafting the terms and conditions of the contract. It must be fair to all employees so that they can perform their duties well. It must also provide equal benefits to all workers.

The Employment Contract

An employment contract is consists of the following:

1. The agreement to employ and be employed. This contains the agreement between the employer and the employee.


2. Description and explanation of employee’s duties. Here, the position and the duties of the employee are stated, including the performing of any service that the employer will assign.


3. Manner of performance of employee’s duties. An employer must be faithful to his work. He/ she must be industrious enough to exert his/her best performance, skill, talent and experience in a way that will satisfy his/her employer.


4. Length and duration of employment. This includes the term of the employment: the years an employee will render his/her service to the company, and date of termination or the end of his service.


5. Payment and reimbursement. The amount of payment or the wage that will be given to the employee is cited here. Also included in this section is the reimbursement of employer to any necessary expenses that the employee will incur while traveling, etc.


6. Employee’s loyalty to the employer and devotion to work. An employee should devote his time, knowledge, skill and attention only to the company he/she is working and also to his/ her employer. The employee will also be entitled to all benefits and profits. However, he/ she must not be interested in other businesses and must be loyal to his/ her company.


7. Confidentiality agreement relating to business. An employee will not be allowed to disclose, divulge or communicate to any person, firm or company in any manner. Any information, issues concerning the company and employer, manner of operation, processes and plans should be confidential and important. Thus, when an employee violated this section it means he/she simply violated the agreement.


8. Availability of the option to terminate employment in case of permanent disability. Here, the employee has the option to terminate the contract in the event the employee became “permanently disabled.” Employer must therefore give prior notice to the employee through registered mail.


9. Closure of business will result to termination of employment. In the event that the employee will discontinue his work or service to the company for the abovementioned reason, this agreement will end and terminate as of the given date.


10. Employee’s commitments binding on employer only on written consent. The employee has no right to make any commitments or contracts on behalf of his/ her employer without any written consent.


11. Restricted contract terms. The contract contains the entire agreement and it must be exclusive to the employer and the employee.


12. The modification or waiver must be considered effective only if it is on writing. No contract will be valid unless it is written and executed by the in-charged party. Moreover, no evidence or any waiver shall be provided in any proceeding or litigation unless it is in writing.


13. Legally sound contract. The agreement must also contain this section stating that it is in accordance with the laws of the state (citing your state).