The Best Free Employment Contract Templates in 2022 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.

What is SignTime?

It can be difficult to coordinate schedules when trying to get your new recruits to sign an employment contract. This can leave you in limbo while you wait for a job to be filled.

That’s why you should use SignTime to collect signatures for your contracts. SignTime is the best digital contract platform available today. With convenient e-signature capabilities, you’ll get signed contracts back from your new hires in record time.

Using convenient e-signatures even makes it easier to coordinate remote working. Simply send new recruits a digital contract!

Sign up for our free trial now, and never chase down signatures again.

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:

1. 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.
2. 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].
3. Compensation
   The Employee is to be paid [dollar amount] [per hour/per year] before applicable deductions.
4. Benefits
   The Company offers the following benefits: [list all benefits]. These benefits begin [immediately/after the probationary period].
5. 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].
6. 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.

Thankfully, SignTime is here to help. With convenient e-signature capabilities, you’ll get signed contracts back from your clients in record time.

You can even set up your own employment contract template repository as you write new contracts. That way you’ll never have to write another non-disclosure agreement again.

Sign up for our free trial now, and get your employees onboarded faster.

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:

Alabama	Alaska	Arizona	Arkansas	California	Colorado	Connecticut
Delaware	Florida	Georgia	Hawaii	Idaho	Illinois	Indiana
Iowa	Kansas	Kentucky	Louisiana	Maine	Maryland	Massachusetts
Michigan	Minnesota	Mississippi	Missouri	Montana	Nebraska	Nevada
New Hampshire	New Jersey	New Mexico	New York	North Carolina	North Dakota	Ohio
Oklahoma	Oregon	Pennsylvania	Rhode Island	South Carolina	South Dakota	Tennessee
Texas	Utah	Vermont	Virginia	Washington	Washington D.C.	West Virginia
Wisconsin	Wyoming

They also offer contracts for different employment types:

• Independent contractor agreement
• Internship agreement
• Subcontractor agreement

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 to any employment contract template?

Here’s the default employment contract template on eForms with explanations for every editable section. There’s a lot of information in this short document so read it thoroughly before using it!

Introductions

Source: eForms

The top part has the start date, the employer and employee’s names, and some standard legalese to introduce the document.

Responsibilities

Source: eForms

The first main section includes the job title, job description, and whether it is a full-time or part-time position.

Employment period

Source: eForms

This section specifies whether the contract is for at-will employment or contract employment. It also details how many days of notice the employer or employee must provide to terminate the contract.

Note that this section straddles two pages. As you can see, the employee and a representative of the employer must initial the bottom of every page. This is common for contracts of all types.

Pay

Source: eForms

This section details the pay and other financial benefits. The pay can be specified as an hourly wage or annual salary. It also states how often the employee will be paid. Finally, there are places to specify commissions or bonuses, including how they are calculated and when they will be paid.

Employee benefits

Source: eForms

If the remuneration package includes benefits such as retirement matching or health insurance, they can be specified here. 

Out-of-pocket expenses

Source: eForms

Some roles require the employee to make purchases as part of work processes. This is especially the case if travel is part of the job description. This section allows the employer to specify whether out-of-pocket expenses will be reimbursed, as well as which expenses are eligible for reimbursement.

Ownership interest

Source: eForms

If ownership in the company is being offered as part of the pay package, then it can be specified here.

Trial period

Source: eForms

Many jobs have a trial period (often called a probationary period), during which the company can end the employment contract without notice. During this time, the employee may not be eligible to use any benefits or take vacation time, sick leave, etc.

Vacation time, personal leave, and federal holidays 

Source: eForms

These sections allow the employer to define how, when, and how much time off an employee can take as vacation time, personal leave, and for federal holidays. 

Importantly, it also defines what happens when the time is not used by the end of the calendar year. Paid time off could be converted into cash, carried over to the following year, or forfeited. 

Confidentiality

Source: eForms

This section operates as a non-disclosure clause (NCC). Note that it lasts for a limited period of time after the termination of the employment contract.

This is a good moment to stress that employment contracts (actually, all contracts) cannot supersede the law. If you specify the NCC will last ten years but the law states three years is the maximum for an NCC, then it will last three years.

Non-compete clause

Source: eForms

As mentioned above, non-compete clauses (NCCs) must be limited. This section specifies whether there is an NCC and how it will restrict the employee. Note that NCCs are often unenforceable. The best way to make one enforceable is to limit the employee in very specific and minimum ways. 

Employer’s role

Source: eForms

This section specifies whether the employee can act on behalf of the employer or if they need to get a supervisor’s permission. For a salesperson, this might mean the employee can sign off on a quote instead of getting permission from a manager.

Appearance, disability, compliance, and return of property

Source: eForms

Appearance states the employee must be present at work and can be terminated for repeated absenteeism. 

The disability section allows the employer to terminate a contract with notice if the employee can no longer perform their duties due to becoming mentally or physically disabled.

Compliance affirms that the employee will follow the rules of the employment contract, all other rules of the company, and any relevant laws.

Some employees, especially now given the rise of remote working, are given equipment to use during work. The return of property section states the employee will return all equipment they have borrowed from the company, including data and records.

Notices

Source: eForms

This section provides a place for the employer and employee to give their mailing addresses for all required correspondence. 

Governing law

Source: eForms

Especially when the employer and employee reside in different jurisdictions, it is important to define under which state’s laws the employment contract will be governed.

Signature page

Source: eForms

As is standard for contracts, it must be signed to go into effect. 

To get your employment contracts signed, you should use SignTime. With convenient e-signature capabilities, you and your recruits can sign the contract on the spot without delays.

The online contract repository is organized using the modern tagging system, which means you’ll never have to search for important paperwork again.

Sign up for our free trial now, and simplify your HR processes.

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.