Employment Agreement Template

In plain language: Identifies the employer and employee as legal entities, states the job title and department, and records the official first day of employment.

Common mistake: Using a trade name instead of the registered legal entity. If the employer entity name doesn't match payroll records, enforcing IP assignment or non-compete clauses against the right entity becomes difficult.

In plain language: Describes the employee's core responsibilities and who they report to, while preserving the employer's right to reasonably adjust duties over time.

Common mistake: Over-specifying duties so narrowly that any role change requires a contract amendment — or leaving them so vague that performance management becomes impossible.

In plain language: States the base salary or hourly rate, payment frequency, any target bonus, and any equity grant — and clarifies that bonus payment is discretionary unless otherwise stated.

Common mistake: Omitting the word 'discretionary' on bonuses. Courts in several jurisdictions have found that a regularly paid bonus becomes a contractual entitlement, even without a written promise.

In plain language: References the company's benefits plan (health, dental, vision, retirement, PTO) and states the policy for reimbursing business expenses.

Common mistake: Detailing specific benefit plan terms inside the contract. Plans change annually — locking specifics creates amendment obligations or creates expectations the plan no longer meets.

In plain language: Assigns to the employer all work product, inventions, software, and IP created by the employee in connection with their role — including after-hours work on company-related projects.

Common mistake: No IP assignment clause at all — or one that only covers work performed on company premises. Employees working remotely or on personal devices may create IP outside the clause's reach if the language isn't drafted broadly.

In plain language: Prohibits the employee from disclosing or using the company's confidential information — trade secrets, financials, customer lists, and product roadmaps — during and after employment.

Common mistake: Failing to define 'Confidential Information' and relying on 'everything is confidential.' Courts apply a reasonableness standard — an overbroad definition can make the whole clause unenforceable.

In plain language: Restricts the employee from joining competitors or soliciting customers and colleagues for a defined period and geography after leaving.

Common mistake: Using a one-size-fits-all non-compete regardless of role seniority. Broad non-competes for junior roles are routinely struck down as unreasonable. Calibrate duration and geography to the employee's actual access to competitive information.

In plain language: States the notice period required for voluntary or employer-initiated termination, conditions that allow termination for cause with no notice or severance, and the severance formula.

Common mistake: No severance formula at all, or a formula that conflicts with statutory minimums in the applicable jurisdiction. In Canada and the UK, contractual severance can be lower than statutory minimums — and the statutory floor applies regardless.

In plain language: Specifies which jurisdiction's employment law governs the agreement and how disputes are handled — arbitration, mediation, or court.

Common mistake: Choosing a governing law that has no meaningful connection to where the employee works. Several jurisdictions — California, for example — apply local law regardless of what the contract says.

An employment contract is a legally binding agreement between an employer and an employee that defines the terms of the working relationship — position, compensation, benefits, working hours, IP ownership, confidentiality, and termination conditions. It creates enforceable obligations on both sides and replaces informal offer letters as the authoritative record of agreed terms.

At minimum: parties and job title, start date, compensation (salary, bonus, equity), benefits, working hours and location, employment type (at-will, fixed-term, or indefinite), IP assignment, confidentiality, non-compete and non-solicit restrictions, termination notice periods, severance formula, and governing law. Missing any of these creates gaps courts will fill using jurisdiction-specific defaults — which often favor the employee.

In the US, no federal law mandates a written employment contract, but most employers use one to establish enforceable restrictions. In the UK, employers must provide a written statement of particulars within 2 months of hire. In Canada, the EU, and Australia, written contracts are standard and certain minimum terms are legally required — oral arrangements expose employers to unlimited common-law notice obligations.

An offer letter summarizes the role and compensation to trigger acceptance. An employment contract is the binding governing document covering confidentiality, IP, non-compete, termination, and severance in full legal detail. Relying solely on an offer letter leaves the employer without enforceable restrictive covenants and creates ambiguity on termination obligations.

In most US states, yes — at-will employment allows either party to end the relationship at any time for any lawful reason. However, at-will is a US doctrine with no equivalent in Canada, the UK, the EU, or Australia. Employers operating outside the US must use notice-period clauses meeting statutory minimums. Even in the US, Montana and certain municipalities restrict at-will termination after a probationary period.

Enforceability depends entirely on jurisdiction and scope. California, Minnesota, North Dakota, and Oklahoma ban most post-employment non-competes. The FTC proposed a near-total ban in 2024 (blocked in court as of 2025 — check current status). In jurisdictions that permit them, courts enforce restrictions that are reasonable in duration (typically 6–12 months), geographic scope, and breadth of activity. Overbroad clauses are struck down entirely rather than narrowed in some states.

In common-law jurisdictions (US, Canada, UK, Australia), a contract requires fresh consideration to be enforceable. An employee who has already started work gave no new consideration for post-start restrictions. Courts have voided IP assignment, non-compete, and confidentiality clauses on this basis. The fix is to execute before day one or provide documented additional compensation — bonus, raise, extra PTO — at the time of signing.

In the US, severance is not legally required unless contracted. A common formula is 1–2 weeks per year of service, with a minimum of 2–4 weeks. In Canada, contractual severance must meet Employment Standards Act minimums (1 week per year of service, capped at 8 weeks under most provincial statutes) plus potential common-law notice. In the UK, statutory redundancy pay runs 0.5–1.5 weeks per year of service depending on age, with a weekly pay cap updated annually.

For straightforward domestic hires, a high-quality template is usually sufficient. Engage a lawyer when hiring executives with equity and complex severance, when the employee works in a heavily regulated jurisdiction, when the role involves sensitive IP in a competitive market, or when non-compete enforceability is critical to the business. A 1–2 hour template review typically costs $300–$600 and is worthwhile for senior hires or cross-border arrangements.

Constructive dismissal occurs when an employer unilaterally changes employment conditions — reducing pay, demoting the employee, or changing location significantly — to the point where the employee is effectively forced to resign. To reduce exposure, include a clause granting the employer the right to make reasonable changes to duties, compensation bands, and work location with appropriate notice, and have the employee acknowledge this flexibility at signing.