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Employment Contract

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About Employment Contract

An employment contract is a signed agreement between an employee and employer. It establishes both the rights and responsibilities of the two parties: the worker and the company.

What Should Be Included in an Employment contract

Job Information

Some key pieces of information to start with include the job title and the team or department with which the employee will work. Explain how performance will be evaluated and to whom the new hire will report.

Compensation And Benefits

Outline the compensation and benefits package. It should include the annual salary or hourly rate, information about raises, bonuses, or incentives and how these may be obtained. Explain what the benefits plan includes — medical, dental, eye care, etc. — what percent the employer pays, and what percent the employee pays. If offered, include information about the 401(k) plan, stock options, and any fringe benefits.

Time Off, Sick Days, And Vacation Policy

Thoroughly explain the time off policy. How many paid vacation days are accrued per pay period? Do vacation days increase with long tenure? Also explain your expectations regarding sick days, family emergencies, or unpaid leave. Can employees make up hours by working after-hours and weekend events?

Employee Classification

Define whether the new hire is an employee or contractor to ensure tax and insurance compliance. Uber has faced many lawsuits due to employment misclassification and continues to fight it. Learn what distinguishes employees from contractors, and classify employees correctly right from the beginning so you won’t have to worry.

The Schedule And Employment Period

The contract should clearly state if employment is ongoing or for a set term. It should also include when the employee is expected to work to define the employer-employee relationship.

Include the amount of hours the employee is expected to work and any flexible working options like working from home or remotely while out of town. If the job requires working nights and weekends, explain when and how often.

Requirements After Termination

The contract should include any restrictions or mandates on an employee after leaving the organization. For example, an employee may not be allowed to start his or her own business in the same industry within the same locale in a specified time period or work with the business’s clients independently. Clearly, define these terms to help protect your business and its clients.

While these basic elements are a good starting point, there are plenty of other things you can include to further define the role or the business relationship. To simplify writing the contract, use a digital template to help guide you.

A Technology Privacy Policy

Clarify what's OK and what’s not regarding the use of social media and email on company property. For example, if you don’t want employees to use company computers or mobile devices to update their personal social media channels or check personal email, say so. If you don’t want employees saying anything negative about work on social media, like these two McDonald’s employees did, prohibit it.

Termination Terms And Conditions

Explain what is required for either party to terminate the relationship, including the amount of notice required and if it should be written.

Severance Or Outplacement Plan Information

It's a bit early to be thinking about this, but should you or the employee decide to part ways, you’ll want to do so nicely to maintain a positive employer brand. Consider offering severance or an outplacement plan.

Confidentiality Agreement

Protect sensitive information like business trade secrets and client data by having the employee sign a confidentiality agreement within the contract. Instead of making this a separate contract or piece of paper, include it as a section of the employment contract and place a field in the section where new hires can sign digitally.

Types of Employment Contracts and Compensation Agreements

Frequently Asked Questions

Employee's right to written details about the employment contract. All employees, regardless of the number of hours they work per week, are entitled to receive a written statement from their employer within two months of starting work. The statement should describe the main terms of the contract of employment.

A contract of employment is a legally binding agreement between you and your employer. A breach of that contract happens when either you or your employer breaks one of the terms, for example your employer doesn't pay your wages, or you don't work the agreed hours. Not all the terms of a contract are written down.

All employment agreements are legally binding on the employer and, therefore, employers are best served by having them drafted and reviewed by an experienced employment law attorney. Contract law is a particularly complex discipline that relies largely on common law, which is law as developed by judges and court cases.

A contract of employment is an agreement between an employer and employee and is the basis of the employment relationship. Most employment contracts do not need to be in writing to be legally valid, but it is better if they are Starting work proves that you accept the terms and conditions offered by the employer

A contract of employment is an agreement between an employer and employee and is the basis of the employment relationship. Most employment contracts do not need to be in writing to be legally valid, but it is better if they are Starting work proves that you accept the terms and conditions offered by the employer.


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