Employee Agreements: An Essential Part of Onboarding

The Payroll Company Employee Retention, Employee Benefits, Onboarding


Onboarding is a key aspect of an employee’s future with your company. It is the introductory process you have to fit your newly hired employees into your organization as seamlessly as possible.

Onboarding is actually a term coined by the human resource industry but it is also called organizational socialization. No matter what you call it, it’s a vital part of integrating your new employee, ensuring they fit well in your company culture and are well-equipped to work towards the same goals. Onboarding can involve many elements, but one of the most essential parts is the employee agreement.

Read on to learn why a contract of employment or employee agreement should be part of any employee onboarding process.

What Are Employee Agreements?

Before moving deeper into the topic at hand, it’s important to first determine what an employee agreement means to you as an employer. This is a type of contract between you as the employer and your employee, freelancer, independent contractor, or subcontractor. A well-constructed employment contract should clearly define the relationship between the parties, providing each party with a clear understanding of their role. By implementing an employee agreement, an employer will be able to clarify the terms of contractual relationships with their employees so both parties are on the same page.


An employment agreement can also be called the following terms:

  • Employment contract.
  • Contract of employment.
  • Employee contract.
  • Job contract.


What Employee Agreements Can Include:

While there are several aspects that can be included in the typical employee agreement, the following are some of the most commonly included elements:
  • Salary: This part of the employee contract would detail the salary an employee will be paid, including wages and commission that has been agreed upon by both parties. Advancement opportunities, as well as raises or increased schedules or evaluation times, should also be made clear.
  • Benefits: This section would include all benefits an employee will have, including insurance plans, holidays, and vacation days. They should all be clearly outlined in the contract.
  • Work Responsibilities: This part of an employment contract includes job descriptions, usually including the employee’s job titles as well as a description of what their responsibilities will be within the company. Both the employee and you as the employer will have the opportunity to clarify and even negotiate the responsibilities assigned to each employee.
  • Employment Duration: While it might seem odd to talk about the end of tenure at its beginning, it’s helpful for planning purposes to know when an employee believes they will be moving on to another job or hope to advance to another position. Therefore, employment contracts can also specify how long an employee plans to work for the company. In some cases, this might be unknown or for the foreseeable future. Other times, it might include a specific ending point or period of time. In some cases, an initial minimum period of time is set with the option of extending it in the future.
  • Schedule: In some cases, employment contracts will also include information about an employee’s schedule including the number of hours and days they must work.

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Why Employee Agreements Are Important

Employee agreements are a valuable part of the onboarding process for many reasons, a few of the most applicable are outlined below:
  • They help define and explain the terms of a new employee’s job, which means there must exist a mutual understanding between employee and employer about what is expected of each.
  • If either party isn’t sure where to proceed on a workplace matter, the employment agreement in conjunction with company guidelines can provide direction and insight for employees and employers alike on how to proceed or find a solution. Of course, this will be dependent on the language contained within the agreement.

Types of Employee Agreements

Just as there are many types of employees and lots of different employers, not all employee agreements are the same. The following is a breakdown of the most common types of employment agreements you can choose to implement within your company:

  • At-Will Employment Agreement
    • This is the most common type of employee agreement issued.
    • Under an at-will agreement, an employee can be terminated or quit without notice.
    • The employer cannot fire an employee for protected reasons, under and at will. Retaliation and discrimination and other protected classes will prevent an employee from being fired.
  • Written Employment Agreement
    • This is more detailed than the at-will variety of agreements.
    • You as an employer will generally fix the duration of written employment contracts.
    • This type of contract will detail termination terms, meaning employees can only be fired if they violate their contracts.
  • Oral Employment Agreement
    • Employment can either be at will or based on specific terms.
    • These contracts are also legally binding but providing them in the case of a breach can be difficult.
    • If this type of contract is breached, the employer or employee can enforce an oral agreement using any documentation surrounding the circumstances to serve as evidence of the contract.
  • Implied Oral Agreements
    • These contracts have no formal documentation and can combine both oral and written statements.
    • Courts often consider an employee’s performance and the length of time in which the employee worked when looking at implied oral contracts.


Advantages of Employee Agreements

  • Duties and benefits are clearly defined for both employees and employers. Contracts specify what responsibilities are included in what job as well as the pay and benefits that can be expected. No one has to wonder what their job entails.
  • It protects both parties from misunderstandings.
  • Helps create stability.

Disadvantages of Employee Agreements

  • Employers cannot fire an employee for no reason if they have signed a contract.
  • It is legally binding, meaning breaching the terms of the agreement has consequences.
  • Renegotiation is the only way to change the terms or specifics within the agreement, which takes agreement by both parties.

Bottom Line: Employee Agreements Are Essential

It’s important to set up an employee agreement to ensure the success of your new hire. Both you and your employee are represented by an employee contract, which allows for a smooth transition from day one.

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