What Is a Contract of Employment?

A contract of employment, also known as an Employment Contract, employment agreement, or job contract, is a contract between an employer and employee that outlines the terms of a job such as the rights, responsibilities, and obligations of both parties.

An Employment Contract generally includes:

• The type of employment the contract is for (full time, part time, or seasonal and permanent or temporary)
• The start date and location of employment
• The employer's information
• The employee's information
• The employee's job title and average work schedule (e.g. 37.5 hours a week)
• The probation period
• How the employee will be paid (hourly, salary, etc.), how much they will receive, and how often they will receive payment (weekly, biweekly, etc.)
• Additional details regarding vacation time, the amount of notice required for termination, confidentiality obligations, noncompete rules, and more

Who Should Use an Employment Contract?

Typically, an Employment Contract is used by:

• A person or company who is hiring an employee to work for them, such as an employer, hiring manager, human resources (HR) manager, recruitment officer, etc.
• A person who is being hired as an employee to work for an employer

Keep in mind, an independent contractor (sometimes called a contractor or subcontractor, depending on the situation) is not considered an employee. If you are hiring an independent contractor, you should use an Independent Contractor Agreement instead.

What Are the Types of Employment?

Generally, a worker is hired as a certain type of employee: permanent or temporary and full time, part time, or seasonal.

Permanent or temporary

Employees are hired on a permanent or temporary contract, meaning:

• The employee continues to work until they are laid off or let go (i.e. a permanent employee)
• The employee works until a specific date or period as indicated in the contract (i.e. a temporary employee, sometimes called a fixed period or fixed term employee)

Full time, part time, or seasonal

An employee can work full time, part time, or on a seasonal basis:

• A full time employee typically works over 30 hours per week on a set schedule and is awarded benefits that other employees generally do not receive such as sick leave, health insurance, paid vacations, and more
• A part time employee generally works less than 30 hours per week and may not be eligible for certain benefits, like health and dental packages
• Seasonal employees are short-term workers who are hired for a specific period of time (like the winter season); they can work full time or part time hours, depending on what job they are required to do

Keep in mind, employment laws (including the definition of each employment type and what a person may be entitled to as a certain type of employee) may differ slightly by state.

What Is the Difference Between an Employee and an Independent Contractor?

An employee and an independent contractor are both a type of worker, but an employee typically differs from a contractor in several ways.

For example, an employee will generally:

• Have a contract outlining the terms of employment
• Collect remuneration (i.e. payment for work) on a predetermined basis (weekly, biweekly, semi-monthly, etc.)
• Work a set schedule, as determined by their employer
• Use tools provided by their employer
• Receive a benefits package (like a health and dental plan) from the employer
• Report to another person, like a manager, director, or CEO

Alternately, an independent contractor will generally:

• Pay their own income taxes, employment insurance, and other similar income deductions
• Pay operating costs (like paying to rent a chair in a hair salon)
• Supply their own tools to complete their job duties
• Be held liable for losses of profit, damage to equipment, lawsuits, and more
• Hire another individual or company to do work (who would typically be called a subcontractor), if required