7 contracts that an employee should know about
An employee researching contracts that an employee should know about

7 contracts that an employee should know about


Entering the workforce is an exciting and challenging venture. One of the crucial steps in starting a job is having a thorough understanding of the legal process and contracts that an employee should know about clearly. In addition, employees must be familiar with the contracts required to ensure their responsibility and obligation. This article will give you brief information about contracts an employee should know about.

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What are the 7 contracts that an employee should know about?

list of 7 contracts that employee must know

If you are confused about which contracts to prioritize among many agreements under employment law, here is the list for you, which includes:

Non-disclosure agreement

What is a Non-Disclosure Agreement (NDA)?

A non-disclosure agreement (NDA) is a legally enforceable contract establishing a personal connection between two parties. The person or parties signing the agreement agree that any sensitive information obtained or intellectual property will not be shared with anyone else. An NDA is also known as a secrecy agreement under employment law.

Non-disclosure agreements are prevalent when firms negotiate with other businesses. They let the parties exchange critical information without worrying about it falling into rivals’ hands. In this scenario, it is referred to as a mutual non-disclosure agreement.

Understanding Non-Disclosure Agreements (NDAs)

The NDA is valid in several situations. First, NDAs are typically necessary when two firms explore doing business together but wish to protect their interests and the specifics of any possible arrangement. In this scenario, the language of the NDA prohibits all parties involved from disclosing anything about the other party’s or parties’ business procedures or goals.

Some businesses also ask new workers to sign an NDA. For example, suppose the employee has access to critical confidential information. Some organizations will need all workers to sign the agreement; others will require only specific departments or groups of employees to sign the deal.

What are some benefits of NDAs for employees?

The fundamental advantage of an NDA is that critical information about your firm is kept private. This might include everything from R&D to potential future patents, money, negotiations, etc. Signing an NDA prevents confidential information from becoming public.

NDA agreements are also explicit. To minimize misunderstanding, they explain what can and cannot be shared. NDAs are inexpensive to construct because they are signed pieces of paper. 

This is one of the most cost-effective methods of keeping sensitive information private. NDAs also specify the repercussions of exposing restricted material and confidential information, which should help to avoid leaks. Furthermore, NDAs are an excellent way to maintain comfort and trust in a relationship.

Employment contract

What is an employment contract?

An employment or employment contract is an employer and employee agreement. Establishing an official working partnership is the legal basis for the two parties under employment law.

“Strategic planning” refers to developing a plan for a specific project. Furthermore, while employing employees, employers will have the employee sign an employment contract outlining the benefits, the employment rights act and considerations provided to the employee.

When a written employment contract is signed, it becomes legally binding. An employment relationship has been officially established under an employment agreement. It is instantly effective if its terms and conditions comply with the law.

What key terms are included in an employment contract?

5 key terms of employment contract

Employees should pay particular attention to the following provisions before signing the employment contract:

  • A detailed job description. This covers the employee’s title and the responsibilities they are expected to do during the contract’s tenure. Duties and responsibilities should correspond to the initial job posting’s job description.
  • Payment conditions (compensation). To minimize misunderstandings, the payment term should be included in the contract. The company should define the rate (hourly, daily, weekly) and when and how employees should anticipate remuneration.
  • Contract duration. This covers the contract’s terms. Furthermore, this part contains technical information, such as the grounds for termination and contract extension alternatives. Some employers incorporate a trial period as well.
  • Benefits. Holiday pay, leave benefits, sick leave, annual leave, health insurance, employee stock options, and any other perks the business provides should be stated. Because some firms mention bonuses in job advertisements, it is critical to be consistent and clear.
  • This section contains restrictive covenants. They should be carefully examined because they may impact your future work prospects. Non-compete agreements, non-solicitation agreements, and severance agreements are some examples.

Offer letter

What is an offer letter?

A job offer letter, or “offer letter,” is a formal document that creates an agreement between an employee and an employer. The company sends the employee an employment offer letter to notice and outline the terms of employment. Title, salary rate, perks, and conditions are typical examples of these phrases.

Because the nature of an offer letter and its rules differ from state to state, please consult with an employment lawyer and get legal advice before employing it in your firm.

What’s included in an offer letter?

The letter should include all essential information, including:

  • Start date.
  • Salary.
  • Title.
  • Schedule.
  • Benefits.
  • Supervisor’s name.
  • All agreements, such as non-compete, non-disclosure and at-will employment.

Workplace sexual harassment policy

What is sexual harassment?

Sexual harassment in the workplace is a kind of sex discrimination that violates Title VII of the Civil Rights Act of 1964. The EEOC defines sexual harassment as unwanted sexual approaches, solicitations for sexual favours, and other sexually related verbal or physical actions.

  • Submission to such behaviour is a requirement or condition of employment. Depending on the situation, the need could be communicated explicitly or implicitly.
  • Acceptance or rejection of the behaviour is used to make job decisions.
  • Sexual conduct that has the intention or effect of unreasonably interfering with work performance

There is no denying that the internet has changed the way people communicate.

The goal of the workplace sexual harassment policy

The goal of a workplace sexual harassment policy is to safeguard men and women in the workplace from unwelcome sexual approaches and to provide instructions for reporting incidences. This policy will also express terms and clarify how the firm handles allegations, punishes sexual harassment, assists victims in recouping their losses and disciplinary procedure. This policy applies to all employees, regardless of gender, sexual orientation, level, function, seniority, position, or other protected characteristics. All employees must follow this policy in a corporation.

Policy on working time, absences and holidays

Definition of policy on working time, absences and holidays

Another contract that an employee should know about is the policy about working hours, absences, and holidays. As an employee, you should feel entitled to the personal time you have earned and not have to fight approval pressures when using it. According to Oxford Economics, six out of ten Americans say their employers discourage them from taking time off. This generates office conflict because employees believe management must be more interested in their personal lives.

An employee attendance policy is written paperwork describing the company’s attitude on taking personal time off and how an employee should seek it. Your organization will have a more sustainable strategy for addressing time off requests if you define a clear employee attendance policy while enabling employees to use their time off.

Your attendance policy is a critical component of your entire business culture, and how you approach it will impact how workers prioritize their professions and personal lives.

Because each employee may have a unique viewpoint when seeking time off, an employee attendance policy offers a clear baseline for both the company and the employee to turn to when resolving difficult or sensitive time off requests. According to the Centers for Disease Control and Prevention, absenteeism cost U.S. companies more than $200 billion in 2015, so having this document on hand will assist in guaranteeing you are getting the most out of your workers while accommodating their requests for time off.

Advantages of policy on working time, absences and holidays

Employees benefit from flexible work hours at the office by avoiding peak-hour traffic commutes, which may decrease fuel expenses and aid the environment. Trying to commute during rush hour might add an hour to your commute time each day. Many employees prefer to set their schedules sooner or later to prevent wasting time that may be spent more productively at home. Another benefit for employees is the opportunity to tailor their program to their personal life, whether fitness or family commitments. The flex schedule gives employees control over their day, making them feel happier about their work environment.

Gratuity policy

Eligibility for gratuity

Employees who have worked for their company continuously for at least five years are eligible for a gratuity. Employees in the public and private sectors are affected by this. The minimum criterion is five years of service, while the qualifying requirements may vary from business to firm.

New rules for gratuity in 2023

On July 1, 2022, the new labour legislation became binding for all companies and organizations. Working hours, the Provident Fund (PF), and the in-hand wage were all decreased in conformity with the new labour legislation. This law will have the most impact on take-home income.

According to the new gratuity policy for 2023, employers must make sure that base pay makes up 50% of an employee’s CTC (cost to the firm) and that the other 50% is made up of overtime, housing expenses, and employee allowances. Additionally, any additional allowances or exemptions paid by the business that exceed 50% of the CTC will be considered compensation.

In the new gratuity policy for 2023, which will increase the gratuity bonus that must be granted to employees, the legislation restricts the maximum basic pay to 50% of CTC. The gratuity will be calculated based on a sizeable base income that comprises a basic salary and benefits.

Employees who work overtime, such as shifts lasting more than 15 minutes, are paid.

Calculation of gratuity

The gratuity amount is determined by the number of years of employment with the company and the most recent income received. The following is the formula for determining gratuity:

Gratuity = (Last drawn salary x Number of years of service x 15) / 26

Paternity and maternity leave policy

Definition of paternity and maternity leave

One type of employee leave is paternity and maternity leave. In addition to various types of time off, employee leave includes absences and medical leaves.

As workers seek a better work-life balance, paternity and maternity leave are becoming more common and in demand. After all, connecting with a newborn is a life experience that most people only experience sometimes. Giving parents a chance to spend time with their child and enjoy it may be a special reward for some. 

What’s the difference between paternity and maternity leave?

The policies of most firms that offer paid paternity leave stipulate that leave is available upon the birth or placement of a child in the home, and the laws that require paternity rest also make this clear.

Usually, maternity leave extends through the child’s delivery and includes every stage of pregnancy. However, under the FMLA, expectant mothers can take time off for maternity leave before the baby is born.

The majority of dads receive time off only after. In certain instances, the term “spouse” has taken the role of “paternity,” which implies a male employee, to encompass same-sex couples.


To conclude, employees must know the essential contracts needed at work. By solidly understanding the contracts involved, they can make informed decisions and avoid potential legal issues that could harm them. Understanding contracts is a critical component of being a successful employee, and it is essential to take the time to learn about these agreements before starting a job. In addition to helping employees, being fully equipped with contracts that an employee should know about will help you enhance your knowledge and can protect yourself before any situation. 

When considering entering into any employee agreement, it is essential to seek the counsel of an established business attorney. This will allow you to work with an enforceable contract that safeguards you. In addition, accurate knowledge of the advantages of contractual terms and whether a firm should accept particular contractual provisions may be found in the advice of professional attorneys. Or, more simply, you can visit the LegaMart directory and employ a lawyer to grasp all the details you need regarding contracts that an employee should know about based on your questions from your smartphone.

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