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The Best Free Employment Contract Templates in 2024 and How to Customize Them
Written by Timothy Ware
Employment contracts usually have the same clauses and structure. This makes employment contract templates particularly useful. All you really need is a general idea of how to write an employment contract and a good collection of templates that can be modified for the different roles in your company. Then, you’ll be able to customize them for each individual hire.
Since laws differ by state, for example, how at-will employment is defined, you’ll want to use an employment contract template that is customized for your state. Don’t worry, I’ve included links to free employment contract templates for every state plus Washington D.C.
In this article, I go through everything you need to know to write an employment contract. Then, I present a very simple employment contract template to give you an idea of what an employment contract looks like.
After that, I provide links to employment contract templates, along with all related documents, such as non-compete agreements (NCAs) and non-disclosure agreements (NDAs). Next, I go through a comprehensive employment contract, step by step, so you can feel confident in modifying an employment contract template.
At the end of the article, you can find a useful FAQ, detailing everything you need to know about employment contracts.
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What is an employment contract?
An employment contract is sometimes called a “contract of employment” or an “employment agreement”. Simply put, an employment contract is between a company and a worker.
The employment contract details all of the compensation and benefits that the business provides the employee. It also defines the job title, position, and responsibilities of the new hire.
Let’s go over everything you would usually find in an employment contract.
What is included in an employment contract?
Every employment contract is different, but they all have some combination of the following information:
- Salary or wages: Whether an employee is paid a wage (hourly compensation) or salary (annual compensation) is mentioned. The pay rate is also defined. If there is a schedule of raises, this can also be included.
- Other compensation: Some employees receive commissions, bonuses, or other financial benefits in addition to their salary. This is also defined.
- Benefits: If an employee gets paid vacation, paternal or bereavement leave, sick days, and so on, then it should also be included in the employment contract. In addition, any pension, employer match on investments (401k), health insurance, etc., should be defined as well.
- Schedule: If an employee is expected to work specific shifts or hours, such as midnight shifts, then this can be included in the employment contract as well.
- Duration of employment: The start date should be included in every employment contract. For contract workers with a specific end date, this should be included as well. Otherwise, the employment contract can be open-ended with specific dates for when negotiations on pay raises, etc., are open.
- Job title and description: The title of the job and the employee’s roles and responsibilities should be clearly defined.
- Confidentiality: Some companies will require employees to sign a non-disclosure agreement (NDA) attesting that they will not discuss private information outside of the company while working at the company and long into the future. Others will use a general non-disclosure clause (NDC) in the employment contract.
- Competition after termination: Similar to NDAs and NDCs, an employer may require an employee to sign a non-compete agreement (NCA) or include a non-compete clause (NCC) in the employment contract. These limit the employee from pursuing similar work at competing companies after their tenure ends. Note that these need to be limited in scope, geography, and duration to be considered enforceable.
- Arbitration: Some contracts will stipulate that any issues must go to arbitration. They will also explain the process, including whether the company will pay for arbitration and/or provide a lawyer to represent the employee.
- Ownership agreement: If the employee’s role includes making materials of any kind, from patents to code or Twitter posts, then the company may include a clause that says they retain ownership of those materials.
- Termination reasons: Most employment contracts will include an at-will clause, which means that the employer or employee can terminate a contract without reason. However, they may define different types of termination that provide the employee with different levels of compensation when the contract ends. Note that these clauses do not reduce an employee’s legal rights. An at-will employee still cannot be fired for illegal reasons such as retaliation or discrimination against a protected class.
Do employment contracts need to be written?
An employment contract does not need to be written. If you have a job, then you have an employment contract. If it isn’t in writing, then it is an implied contract of some type. Since employment contracts exist no matter what, it is always valuable to formalize them in writing. Here are some of the different types of employment contracts.
Written employment contracts
Written employment contracts are probably what comes to mind when you think about an employment contract. These are written out and include some or all of the elements discussed above, as well as others that are specific to the role.
Implied employment contracts
Implied contracts are ones that can be inferred to exist based on communications between the employee and the employer. For example, employee manuals, emails, and phone calls during the hiring process, pay stubs, and the employer’s history with other employees can all be used to determine whether an employment contract exists and what it states.
Implied employment contracts often come into play when an employee has been with a company for years and has received several promotions, raises, and job description changes. The company may not update their written employment contract each time the role changes, so the working history of the employee and any communications between them and the company can be considered as revisions to the original contract.
Union labor agreements
Unions negotiate and sign contracts with companies. Their members then sign a collective agreement with the union. These contracts are often very detailed and include pay scales for raises and promotions. They usually also include dates by which collective agreement must be renegotiated.
One clause that is unique to union labor agreements explains grievances. Since union workers have more clearly defined rules, this clause explains how individual members can notify union leaders about violations of the agreement and how union leaders will represent them when bringing these grievances to the company.
Others
While the above contracts are the most commonly seen, there are other special employment contracts for unique working relationships.
Independent contractor agreement: The IRS classifies contractors as 1099 employees. They are individuals who are paid to perform a service. Independent contractors are often called freelancers, and I have an in-depth article dealing with great freelancer employment contract templates.
Subcontractor agreement: This is an agreement between a contractor and a subcontractor. After a contractor signs an agreement with a company to perform some work, they may then outsource part (or all) of the contract to subcontractors. If you are an independent contractor, be sure to confirm whether your employer allows subcontracting first.
Internship agreement: Unpaid or paid interns can have special contracts that limit the scope and duration of their employment.
What are some other contracts employees might need to sign?
I mentioned above two other specific contracts that an employer may have employees sign: NDAs and NCAs.
Non-disclosure agreement (NDA): Employees are often given access to private information, such as codebases, processes, and financial information. If this information were given to competitors or released publicly, it could damage the company. To protect itself, a company will usually require an employee to sign an NDA or have a non-disclosure clause (NDC) in their employment contract.
Non-compete agreement (NCA): NCAs restrict what an employee can do upon terminating their contract with an employer. They are usually signed by upper management and employees with key skills. NCAs and non-compete clauses (NCCs) must be limited in three specific ways to be considered enforceable. Even when limited in the following ways, many jurisdictions are beginning to consider NCAs as unenforceable.
- Scope: The NCA must limit which companies, industries, and/or positions are restricted.
- Location: The NCA must limit where it is enforced, for example a city or state.
- Duration: The NCA must limit for how long it is enforced, for example, six months or one year.
What are the pros and cons of having a written employment contract?
While there are clear benefits to having a written employment contract, they also have some downsides. Here are some of the pros and cons of having a written employment contract.
The advantages of a written employment contract
Written employment contracts clearly define what the employer and employee get out of the work arrangement. The company gets a worker who will do a specific, defined job. The worker gets a specified salary along with other benefits. This facilitates the relationship.
It also protects both the employer and employee as they have a reference document that defines their relationship. This means a more stable work life for the employee and more stable business processes for the company.
The disadvantages of a written employment contract
While the stability and clarity of a written employment contract are major benefits, they lead to less flexibility. A contract is legally binding, which could be troublesome if the employee or employer wants to change something in the future. Indeed, revising the contract can mean another round of negotiations.
Simple employment contract template
The following is a simple, “bare essentials” employment contract template. Note that you should always consult a lawyer before using a contract and that the following does not constitute not legal advice. For more tips on writing an employment contract, check out this companion post.
Employment contract template example
This employment contract, dated on [date] in the year [year], is entered into by [Company Name] (hereafter, Company) and [Employee Name] (hereafter, Employee) of [City, State]. This document constitutes an employment agreement between these parties and is governed by the laws of [state or district].
IN CONSIDERATION of this employment contract, the Company and the Employee agree to the following terms and conditions:
- Employment
The Employee agrees to carry out the responsibilities and duties set out in this contract and their job description. The Employee also agrees to comply with all company policies and procedures, as well as any applicable state and/or federal laws. - Position
The Employee is given the job title [job title]. The following are the duties of [job title]: [list all duties related to the job title]. - Compensation
The Employee is to be paid [dollar amount] [per hour/per year] before applicable deductions. - Benefits
The Company offers the following benefits: [list all benefits]. These benefits begin [immediately/after the probationary period]. - Paid time off
The Employee is offered the following paid time off after the probationary period: [length of vacation time], [length of sick time], and [length of bereavement time]. - Termination
The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under the applicable law of [state or district]. If the Employee’s employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards, or compensation other than as provided by this Agreement or as may otherwise be established under the Company’s existing employee benefit plans or policies at the time of termination.
Use SignTime to execute and store your employment contracts
With all of the paperwork required, from NDAs and NCAs to employment contracts, it can be difficult to coordinate signatures. It can also be difficult to find and pull a specific agreement to confirm your rights and responsibilities with that employee.
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The best employment contract templates
As promised, here are some of the best free employment contract templates you can find. They are conveniently organized by eForms. I also provide information from the same site when discussing real estate contract templates.
First, you can see that eForms has employment contract templates for every state:
They also offer contracts for different employment types:
You can also find some related agreements:
- Non-compete agreement (NCA)
- Non-disclosure agreement (NDA)
- At-will employment agreement
- Dentist employment agreement
- Employment separation agreement
- Real estate agent employment agreement
Next, I’m going to go through their default comprehensive employment agreement in detail so that you feel comfortable modifying it for any role.
What are the essential components of an employment contract template?
A comprehensive employment contract typically covers several key areas, including the employee’s role, compensation, benefits, working conditions, confidentiality obligations, and termination terms.
The following sections explain the main components commonly found in employment contract templates, based on the types of provisions included in templates available from eForms.
Introductions
The introductory section identifies the parties entering into the agreement and establishes the basic details of the employment relationship.
It typically includes the effective date of the agreement, the employer’s name, the employee’s name, and introductory language confirming that both parties are entering into an employment relationship.
Responsibilities
This section defines the employee’s position and responsibilities.
It may include the employee’s job title, a description of their duties, and whether the position is full-time or part-time. Clearly defining responsibilities helps both the employer and employee understand what is expected from the role.
Employment period
This section explains the expected duration of the employment relationship.
Depending on the arrangement, employment may be at-will, open-ended, or established for a fixed term. The agreement may also explain how either the employer or employee can terminate the employment relationship and whether advance notice is required.
Employers should make sure that any termination provisions comply with applicable employment laws.
Pay
The compensation section explains how the employee will be paid.
It may specify whether compensation is provided as an hourly wage or annual salary, as well as how often the employee will be paid.
If the compensation package includes commissions, bonuses, or other incentives, the agreement may also explain how they are calculated and when they are paid.
Employee benefits
If the employee is eligible for benefits, they can be described in this section.
Depending on the employer and position, benefits may include health insurance, retirement plans, employer contributions, paid leave, or other benefits.
The agreement may also refer to separate company policies or benefit plans that explain eligibility and conditions in greater detail.
Out-of-pocket expenses
Some roles require employees to pay for work-related expenses, particularly when travel, transportation, accommodation, or other purchases are part of the job.
This section can explain which expenses are eligible for reimbursement and the process the employee must follow to claim them.
Clearly defining reimbursement rules can help avoid uncertainty about which expenses the employer will cover.
Ownership interest
Some compensation packages include stock, equity, stock options, or another form of ownership interest in the company.
If ownership interest is included as part of the employee’s compensation, the agreement can describe the basic arrangement and refer to any additional documents that govern the equity award.
Trial period
Some employers use a trial or probationary period when a new employee joins the company.
This section may define how long the period lasts and whether particular conditions apply during that time.
The legal effect of probationary periods varies by jurisdiction, so employers should make sure that any provisions relating to termination, benefits, or leave comply with applicable employment laws.
Vacation time, personal leave, and federal holidays
This section explains how vacation time, personal leave, sick leave, and holidays are handled.
It may define how much paid time off an employee receives, how it is accrued, when it can be used, and whether unused time can be carried over to the following year.
Depending on company policy and applicable law, unused paid time off may be carried forward, paid out, or forfeited.
Confidentiality
Employees may have access to confidential information such as customer data, financial information, business strategies, product plans, or internal processes.
A confidentiality section defines how this information must be handled and what information the employee may not disclose.
It may also specify whether confidentiality obligations continue after employment ends. Any such restrictions should be reasonable and comply with applicable law.
Non-compete clause
Some employment agreements include restrictions on competitive activities after the employee leaves the company.
A non-compete clause may define the types of activities that are restricted, how long the restriction applies, and the geographic area it covers.
However, the enforceability of non-compete clauses varies significantly by jurisdiction. Some jurisdictions restrict or prohibit them entirely, so employers should review applicable law before including this type of provision.
Employer’s role
This section can define whether the employee is authorized to act on behalf of the employer.
For example, certain employees may be allowed to approve quotations, enter into agreements, or make other business decisions within specific limits.
Clearly defining this authority can help prevent misunderstandings about what an employee is permitted to approve or commit to on behalf of the company.
Attendance, disability, compliance, and return of property
A comprehensive employment agreement may also contain provisions covering attendance, compliance with company policies, and the return of company property.
Attendance provisions can explain expectations regarding working hours and employee availability.
Compliance provisions may require employees to follow company policies, contractual obligations, and applicable laws.
The agreement may also require employees to return company property when employment ends. This can include laptops, phones, security cards, documents, records, confidential information, and other equipment belonging to the employer.
Any provisions relating to an employee’s health, disability, or ability to perform their duties should be drafted carefully and comply with applicable employment and anti-discrimination laws.
Notices
The notices section explains how formal communications relating to the employment agreement should be delivered.
It may include the employer’s and employee’s mailing addresses, email addresses, or other approved methods of communication.
The agreement may also explain when a notice is considered to have been received.
Governing law
A governing law clause identifies which jurisdiction’s laws apply to the employment agreement.
This can be particularly important when the employer and employee are located in different states or jurisdictions.
However, employment agreements may also be subject to mandatory local employment laws regardless of what is stated in the contract, so employers should confirm which laws apply before relying on a standard template.
Signature page
The signature section confirms that the employer and employee have reviewed and agreed to the terms of the employment agreement.
It typically includes the names of both parties, their signatures, and the date of signing.
Electronic signatures can also be used to complete employment agreements, allowing employers and employees to sign documents remotely without printing, mailing, or scanning paperwork.
As is standard for contracts, it must be signed to go into effect.
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Employment contract template FAQs
Here are some frequently asked questions about employment contracts.
What is an employment contract?
An employment contract is an agreement between an employer and an employee. It explains every part of the agreement between the company and the worker (read more here).
Do employment contracts renew each year?
Most employment contracts are open ended and do not need to be renewed. If an employee is promoted or gets a raise, it may be valuable to update the agreement with an addendum.
Differently, union labor contracts usually have a specified term of one to several years, after which they need to be renegotiated.
What happens if an employee refuses to sign an employment contract?
Generally, if an employee refuses to sign an employment contract, then they are not hired. If they are a high-value recruit, then the company may choose to negotiate a revised contract.
What is an implied employment contract?
Contrary to popular belief, all employees have a contract. When a written contract isn’t signed, the employee is working under an implied contract. This a contract that can be extracted from communications, employer history, previous paychecks, and local laws (see more here).
What is the difference between an employee and an independent contractor?
An employee works directly for a company in exchange for a wage or salary and benefits. An independent contractor is technically their own company, and they are working in a fee-for-service structure (more on this here).
What should be included in an employment contract?
An employment contract should be as detailed as possible. It should include basic information about the employer and employee, including their names and addresses. It should also include all compensation and benefits, as well as a job title and all responsibilities of the job.
There should also be a clause detailing how termination of the contract works, including whether the employee is hired at-will. Most contracts have a non-disclosure clause. Some might also have a non-compete clause and an ownership clause (read more here).
What is contract employment?
Contract employment is a work arrangement with a defined duration. Contract employers have a specified end date to their contract and usually have specific ways in which the contract can be terminated early.
Should you have an employment contract?
When you do not have a written employment contract, you are still working under an implied employment contract. It is generally beneficial to have a formal written employment contract (for more, check here).
What is a letter of offer?
A letter of offer confirms that a company would like to hire a recruit. These are legally binding documents that outline an expected start date and salary. They are purposefully vague to prevent legal liability in the case that an offer is rescinded or rejected. Note that a letter of offer does not guarantee a job, as the recruit may still need to pass a drug test and/or background check (more details here).
What is an appointment letter?
An employment letter follows a letter of offer and provides more details. If there is no written employment contract, then the appointment letter can become part of the implied employment contract (read more about this here).
What is the difference between a letter of offer and an employment contract?
A letter of offer is an initial document confirming the company’s intent to hire a recruit. They are generally shorter and less detailed than an employment contract. An employment contract is usually signed during orientation on the first day of work (more can be found here).
How do you write an employment contract?
The first step to writing an employment contract is finding a great template. For your convenience, I’ve linked to many in this article to save you some time (remember what I said about shortcuts?). Next, you should gather useful information from the job posting. Finally, be sure to consult a lawyer when you are done modifying an employment contract to make sure it is legal and reasonable (see here).
What should an employee do before signing an employment contract?
An employee should always thoroughly read and understand an employment contract before signing it. They should look for any red flags, such as a broad non-compete clause that would hurt their future career. They should also make sure they get a copy of the contract (more on this here).
What is a probationary period?
Sometimes, new employees are subjected to a probationary period (also called a trial period). During this time, usually three to six months in length, the employer can terminate the contract without cause. It is common for benefits, such as health insurance and paid leave, to not take effect until after the probationary period.
How are part-time and full-time employment defined?
There are no federal laws in the U.S. defining full-time vs. part-time work. However, generally, part-time work is between 1 and 34 hours per week, while full-time work is between 35 and 40 hours per week. Note that, after 40 hours per week, qualified employees are entitled to overtime pay, which must be at least 1.5 times their normal pay rate.
Use employment contract templates to simplify hiring
A good employment contract template can save you a lot of time when writing an employment contract. However, you’ll still need to understand the contract thoroughly to modify it for each new hire.
Whether you employ one person or a thousand, SignTime is here to help. With convenient e-signature capabilities, new recruits will be able to return employment contracts wherever they are in the world.
With an easy-to-access and organized online contract repository, never search for important paperwork again.
