Employment agreement policy template

A standardized employment agreement policy assists HR professionals in ensuring consistency, clarity, and legal compliance across all employment contracts. It streamlines the hiring process, reduces ambiguities, and fosters a transparent working relationship between the employer and the employee.

What is the employment agreement policy?

These agreements are essential in setting clear expectations, defining roles and responsibilities, and protecting the rights of both parties. By having a standardized policy, your organization ensures that all employment agreements are consistent, fair, and in line with organizational values and legal requirements.

An employment agreement policy should include:

• A clear description of the employee’s job duties and responsibilities
• Details about compensation, including salary, bonuses, and benefits
• Information about employee benefits, such as health insurance, retirement plans, and paid time off
• Provisions for terminating the employment relationship, including notice periods, severance pay, and non-compete clauses

Is there a difference between an employment agreement and an employment contract?

An employment agreement and an employment contract are terms that often get used interchangeably, yet they carry different implications and are utilized distinctly in various global contexts. 

The term employment agreement, predominantly used in the U.S., generally refers to a broader, sometimes informal understanding between employer and employee, which may or may not be legally binding. 

Conversely, employment contract is a term more common in European countries and Canada, typically referring to a formal, legally binding document that meticulously outlines the terms and conditions of employment, including specific job responsibilities, duration, compensation, and other pertinent terms.

Step-by-step instructions for writing your own employment agreement policy

1. Review existing policies and agreements: Start by reviewing your organization’s current policies and agreements related to employment, including offer letters, contracts, and handbooks. Identify any gaps or areas that need clarification.
2. Define job duties and responsibilities: Clearly outline the employee’s job duties and responsibilities. This section should provide a detailed description of the employee’s role, including specific tasks and expectations.
3. Determine compensation and benefits: Outline the employee’s compensation package, including salary, bonuses, and benefits. Provide details about health insurance, retirement plans, and other perks.
4. Establish termination procedures: Explain how the employment relationship can be terminated, including notice periods, severance pay, and non-compete clauses. Be sure to include provisions for both voluntary and involuntary termination.
5. Include confidentiality and non-disclosure agreements: If appropriate, include provisions that protect your organization’s confidential information and intellectual property.
6. Review and revise: Once you have drafted the policy, review it carefully and make any necessary revisions. Seek input from legal counsel and other relevant stakeholders.

7. Implement and communicate: Once the policy is finalized, implement it immediately and communicate it clearly to all employees. Make sure everyone understands their rights and responsibilities under the new policy.

Employment agreement policy template

[Organization Name] 

Employment Agreement Policy

1. Brief & purpose

This policy outlines the terms and conditions of employment for [Organization Name] employees. It is designed to provide a clear understanding of the expectations and responsibilities of both the employee and the organization, and to establish a positive and productive work environment.

2. Job duties and responsibilities

The following job duties and responsibilities apply to all [Organization Name] employees:

• Position description: Each employee shall have a clear understanding of their position description, including specific job duties and responsibilities. This information shall be provided to the employee upon hiring and updated as necessary.
• Performance expectations: The organization shall establish performance expectations for each position, including measurable goals and objectives. Employees are expected to meet or exceed these performance expectations to maintain their employment status.
• Work schedule: Employees shall adhere to a regular work schedule, unless otherwise approved by management. The organization reserves the right to modify work schedules as needed to meet business needs.
• Job requirements: Employees are expected to perform their job duties in accordance with established policies, procedures, and standards. They must also comply with any applicable laws, regulations, and industry standards.
• Professional development: The organization encourages professional development and may provide opportunities for training, education, and career advancement. Employees are expected to take advantage of these opportunities to enhance their skills and knowledge.
• Collaboration: Employees are expected to collaborate with colleagues, departments, and other stakeholders to achieve organizational goals and objectives. They must foster a positive and respectful work environment that promotes teamwork, open communication, and mutual respect.
• Compliance: Employees must comply with all organizational policies, procedures, and guidelines, as well as any applicable laws, regulations, and industry standards. They must immediately report any violations or suspected violations to their supervisor or HR representative.
• Confidentiality: Employees must maintain confidentiality regarding sensitive information, including client data, financial reports, and trade secrets. They shall not disclose such information to unauthorized individuals or entities without prior written consent from the organization.
• Intellectual property: Employees agree to assign all intellectual property rights to the organization for any inventions, designs, patents, copyrights, trademarks, or trade secrets developed during their employment. They shall not claim ownership or compensation for such intellectual property.
• Return of property: Upon termination of employment, employees must return all organizational property, including equipment, software, documents, and confidential information. They shall also delete any confidential information stored on personal devices or cloud storage services.
• Non-Compete clause: For a period of [X] years after termination, employees agree not to engage in any activity that is in competition with the organization’s business. This includes starting a competing business, working for a competitor, or soliciting clients or employees.
• Dispute resolution: Any disputes arising from this policy shall be resolved through binding arbitration, in accordance with the rules of the American Arbitration Association. The parties agree to share equally in the costs of arbitration.

3. Compensation and benefits

Salary: The employee shall receive a salary of $X per year, paid in equal installments on the last day of each month.

Bonuses: The employee may be eligible for bonuses based on individual or company performance. Any bonuses will be paid in accordance with the organization’s bonus policy.

Benefits: The employee shall be entitled to the following benefits:

• Health insurance: The organization will pay 80% of the premium cost for health insurance coverage for the employee and their dependents.
• Retirement plan: The organization will contribute 4% of the employee’s salary to a retirement plan, subject to a maximum contribution of $X per year.
• Paid time off: The employee shall be entitled to X days of paid vacation per year, plus X days of sick leave per year.
• Other perks: The organization will provide X other perks, such as gym membership, free parking, and a flexible work schedule.

4. Termination procedures

• Notice periods: The employee must provide at least X weeks’ written notice prior to terminating their employment with the organization.
• Severance pay: In the event of involuntary termination, the organization will pay severance pay to the employee equal to X weeks’ salary.
• Non-compete clauses: For a period of X years after termination, the employee agrees not to engage in any activity that is in competition with the organization’s business.

5. Confidentiality and non-disclosure agreements

The employee acknowledges that they have access to confidential information and intellectual property belonging to the organization. They agree to keep this information confidential and not disclose it to anyone without the organization’s prior written consent.

6. Review and revision

This policy may be reviewed and revised from time to time by the organization, and the employee will be notified of any changes.

7. Implementation and communication

This policy is effective immediately and supersedes all previous policies related to employment agreements. The organization will communicate this policy to all employees and ensure that everyone understands their rights and responsibilities under the new policy.

8. Governing law

This policy shall be governed by and construed in accordance with the laws of [State/Province].

9. Entire agreement

This policy constitutes the entire agreement between the employee and the organization regarding employment terms and conditions. No other agreements, representations, or warranties have been made.

10. Amendments

This policy may be amended from time to time by the organization, and the employee will be notified of any changes.

By signing below, the employee acknowledges that they have read, understood, and agreed to the terms and conditions outlined in this policy.

Employee signature: ________________________________ Date: _______________________________

Organization signature: ______________________________ Date: ______________________________

Disclaimer: This policy template is meant to provide general guidelines and should be used as a reference. It may not take into account all relevant local, state or federal laws and is not a legal document. Neither the author nor Workable will assume any legal liability that may arise from the use of this policy.