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A work contract or an employment agreement is an official document that is utilized to put forward the working connection between the employer and the employee. You can use the document to outline the roles and responsibilities of the employee. An employment contract can be as simple as a simple handshake or even transferred verbally. However, it is advisable to have a written work contract. This will ensure that the employer and the employee have a good working relationship. Furthermore, a set of guidelines also gets into play, leading both parties to function as needed.

Sectors Needing a Work Contract

A work contract is important on a large scale. However, most employees do not have employment contracts with the organization they work for. This is because they work under an implied employment contract. An implied employment contract is defined as the general terms of employment determined by state and federal laws and previous court cases.

However, an implied contract is risky. Thus, this might turn out to be of great loss to you, either mentally or physically. Thus, to mark an end to it, you must know about the sectors which must contain a work contract:

  • An Irreplaceable Employee: Every firm requires a high-level professional. Thus, if you get your hands on one, know that it would be hard to replace them. Therefore, you can use the work contract to limit the employee's ability to leave. The employee can step out anytime by serving a proper notice period per the company's norms.
  • An Employee Knowing Confidential Information: According to a study by Osterman Research, 69% of firms have suffered due to leaks of data. This resulted from the departure of an employee from the firm. Whether intentionally or unintentionally, the chances of leaking information are high. Thus, you can bind employees to a work contract to make them conscious of it.
  • To Avoid Competition: In this case, an employment or work contract may be a good idea. This will limit the employee's ability to leave and compete against your firm for business. Therefore, getting an employee to sign the non-compete agreement would be beneficial for you.

Therefore, these are some of the sectors in which you can employ the work contract. Make sure you outline the guidelines required for an employee to follow. This will ensure proper communication between both properties, thus sparking a healthy working relationship.

Clauses in a Work Contract

An employment contract or a work contract has many clauses attached to it, as specified below:

  • Probationary Period Clause: An employer and employee agree upon a period within which both parties can end the contract with immediate effect at any time. This is referred to as the probationary period. It should be noted that a probationary period clause in a fixed-term employment contract for a period shorter than six months must not be added.
  • Non-Compete Clause: A non-compete clause temporarily limits the freedom of an employee to work elsewhere after his employment has ended. Thus, the employee will be prevented temporarily from working for a competitor and cause harm to your company. The contract must specify, inter alia, its duration and geographical scope.
  • Non-Solicitation Clause: A particular kind of non-compete clause temporarily prohibits the employee from working for business associates of the former employer. This non-solicitation clause can also prohibit its employees from maintaining contact with clients. This is only valid in employment contracts for a definite period when the obligation to give adequate grounds has been fulfilled.
  • Ancillary Activities Clause: This clause states that the employee is not allowed to perform other work than for his employer. However, the employee can perform other work if he has received approval to do so. It should be noted that the prohibition of other paid activities is limited to the duration of the employment contract.
  • Changes Clause: A Changes clause implies that the employer can change the employee's employment conditions. As employees are protected by law, the conditions can be changed only by the employee. However, if the employer has agreed on a change, the employee's interest may sometimes have to give way.
  • Incorporation Clause: This clause is defined as the employment contract in which a collective labor agreement/personnel handbook containing employment conditions is declared applicable. Therefore, the employee and the employer have to adhere to the agreed conditions.
  • Confidentiality Clause: An employment contract includes a confidentiality clause. This clause ensures that the employee will observe integrity both during and after employment. This keeps the firm safe and prevents mishaps.
  • Penalty Clause: Penalty is a part of an employment contract. This implies that if the employee breaches any confidentiality or any other obligation, a certain amount will be paid in certain cases. The judge can reduce the penalty amount.

These are the clauses that exist in an employment contract. The clauses bind both the employer and the employee, so both parties strictly follow the rules and regulations outlined in the work contract.

Note: You can also learn about different types of contracts from here.

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Anti-Discrimination Laws Concerning a Work Contract

Under U.S. Federal law, it is illegal to discriminate against an employee based on their race, color, religion, sex, national origin, age, disability, or genetic information. Harassment of these characteristics, too, is intolerable. An estimated 15 employees are covered by this federal law body, like most labor unions and employment agencies. Below listed are some of them:

  • Title VII and Title II of the Civil Rights Act of 1964: Prohibit discrimination against employees and applicants based on color, race, sex (including pregnancy, gender identity, and sexual orientation), national origin, and religion. It protects employees from retaliation for filing a charge, complaining of discrimination, or assisting in an investigation of discrimination.
  • Age Discrimination in Employment Act (“ADEA”): The ADEA prohibits employment discrimination against people of forty years of age and older.
  • Americans with Disabilities Act (“ADA”): It is a federal law prohibiting any type of discrimination against individuals (applicants, employees, and guests) with a disability.
  • Equal Pay Act (“EPA”): This amendment to the Fair Labour Standards Act prohibits paying different wages to employees of different sexes who perform equal work under similar conditions.
  • Pregnancy Discrimination Act (“PDA”): This act is an amendment to Title VII that prohibits any kind of discrimination against an employee because of pregnancy.
  • Genetic Information Non-Discrimination Act (“GINA”): GINA prohibits employers from discriminating against employees based on their "genetic information." The law also prohibits employers from requesting, requiring, or purchasing an employee's genetic information.
  • The Immigration and Nationality Act ("INA"): It prohibits employment discrimination based on citizenship or nationality status. It protects U.S. citizens, nationals, asylees, refugees, and recent U.S. permanent residents and prohibits unfair document practices.
  • State Laws: State laws apply to the states in which they are enacted. Many of the states have passed certain laws that prohibit any kind of discrimination. Sometimes, these laws mirror federal statutes. However, in some of the cases, these laws provide a layer of additional or increased protections not required by federal laws.

Key Terms for Work Contracts

Below are the key terms associated with a work contract:

  • Claimant: The individual bringing a claim to an Employment Tribunal.
  • Constructive Dismissal: A situation in which an employee claims to have been 'constructively dismissed' due to the mistreatment they received in the workplace.
  • Contract of Employment: A legally binding agreement between an employer and an employee.
  • Capability Meeting: A meeting set by an employer to discuss an employee’s performance, sickness, or absences.
  • Disciplinary Hearing: A formal meeting arranged by an employer to address any conduct issues they have with an employee.
  • Discrimination: Legally, discrimination occurs when an employee is treated unfairly. This can occur based on sex, race, disability, or age. Also known as Protected Characteristics.
  • Employment Tribunal: This is a type of court that will hear most claims from employees, such as discrimination or unfair dismissal.
  • Equal Pay: Set out in the Equality Act 2010, equal pay must be given to men and women in the same employment. However, it can be different, and there is a justifiable reason for a difference in pay.

Final Thoughts on Work Contracts

Therefore, these are the important terms and conditions concerning a work contract. You should be following them as it ensures healthy employment relations. Furthermore, you must not forget about the laws. This is because they form up to be the basis of a work contract.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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