Employment Contract
A legally binding agreement between employer and employee that specifies the terms of employment — compensation, role, duration (if fixed), termination conditions, and any special provisions. More common for executives, contractors, and international hires than for general US employees.
An employment contract is a formal legal agreement between an employer and employee that defines the terms of the employment relationship. It's more legally binding and detailed than a standard offer letter. **When employment contracts are common:** - C-suite and senior executives - Fixed-term or project-based roles - Independent contractors - International assignments - Unionized workers (covered by collective bargaining agreements) - Roles with significant IP creation, confidentiality requirements, or compensation complexity **What employment contracts typically include:** - Defined role, title, and responsibilities - Compensation terms (base, bonus structure, equity) - Duration (fixed-term or indefinite) - Termination provisions (what constitutes cause; notice requirements; severance) - Non-compete and non-solicitation clauses - IP assignment (who owns work product created during employment) - Confidentiality and NDA provisions - Dispute resolution (arbitration clauses) **Vs. offer letter:** An offer letter is a summary of key terms; a contract is more comprehensive and legally detailed. For most professional roles, an offer letter is sufficient. For senior roles or complex situations, a formal contract provides more protection for both parties. **Get it reviewed:** For executive-level contracts or those with unusual provisions, getting a 1-hour consultation with an employment attorney ($200-$500) is often worthwhile — particularly for non-compete scope, termination provisions, and equity terms.
Why it matters
An employment contract provides more certainty and protection than at-will employment — but the terms of that contract can also restrict your future options significantly. Understanding what you're signing before you sign it matters more at the executive level than almost anywhere else.
Candidate tip
Before signing any employment agreement with a non-compete, IP assignment clause, or mandatory arbitration provision, spend an hour with an employment attorney — the cost is low relative to the potential multi-year impact on your career options.
Related terms
Offer Letter
Offers & NegotiationA formal document from an employer outlining the terms of a job offer — title, salary, start date, benefits, reporting structure, and key conditions. The offer letter is the foundation for negotiation and the legal record of agreed terms.
Non-Compete Agreement
Offers & NegotiationA contract clause that restricts a former employee from working for competitors or starting a competing business for a period after leaving. Enforceability varies dramatically by state. California bans them entirely; other states enforce them with limitations.
At-Will Employment
Offers & NegotiationThe legal default in the US where either party — employer or employee — can terminate the employment relationship at any time, for any reason (with some legal exceptions). Most US jobs are at-will unless a contract specifies otherwise.
Severance Package
Offers & NegotiationCompensation and benefits provided by an employer when terminating an employee — typically a payment based on tenure, plus benefits continuation. Severance is not legally required under US federal law but is common at professional employers.