Contract Glossary
Employment Agreement
Definition
A contract between an employer and employee that defines the terms of employment — compensation, benefits, job duties, termination conditions, confidentiality obligations, and post-employment restrictions. Unlike an offer letter (which is typically a brief summary), an employment agreement is a comprehensive, legally binding document that protects both parties.
In Practice
You're hiring a VP of Engineering at $180,000/year with stock options. The employment agreement specifies: base salary, bonus structure and targets, vesting schedule for equity, IP assignment (everything they create belongs to the company), a 12-month non-compete limited to direct competitors in the same metro area, a non-solicitation clause covering clients and employees, confidentiality obligations that survive termination, and termination provisions — including what constitutes 'for cause' and what severance looks like for termination without cause.
Example Clause
Employee agrees to devote their full business time and effort to the Company during the Term. Employee's base compensation shall be [amount] per year, payable in accordance with the Company's standard payroll practices. All Inventions conceived or developed by Employee during the Term, whether or not during working hours, that relate to the Company's business shall be the sole property of the Company, and Employee hereby assigns all rights therein to the Company.
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Frequently asked questions about employment agreement
Not legally required in most US states (at-will employment means either party can terminate at any time), but strongly recommended for key employees, executives, and anyone with access to confidential information or trade secrets. For rank-and-file employees, an offer letter plus an employee handbook may suffice. For anyone in a sensitive role, a full employment agreement is worth the cost.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.