What is a Contractual Employment Agreement?

by  Adv. Priyanka Sampathy  




3 mins


contractual employment agreement

A Contractual Employment Agreement is a type of legal agreement which outlines the legal obligations, rights, and duties of an employer and an employee. The agreement is legally valid with every detail mentioned and signed by both parties. It is usually signed for an agreed period for the exchange of service and wage.

What is an Employment Contract?

  • An Employment Contract is a type of written agreement between two parties, i.e., employer and employer, where they provide every detail about the pay, duty, working hours and bonus, etc.
  • A contract employee is an individual with a contract of employment which can be characterized as a contract of service.
  • The Contractual Employment Agreement is the base of any type of relationship between the employer and employee.
  • The establishment of regulations and responsibilities is built through a Contractual Employment Agreement between the worker and the company. The terms of employment and other details of their objectives are elaborated in such a type of contractual employment agreement.

The employees can be divided into three categories, and their Contractual Employment Agreement is based on such terms as follows:

  • Casual:  An employee who does not have any fixed or guaranteed timing or hours works as a casual employee who completes the job accordingly when allotted and asked for.
  • Full-time: If an employee is denoted as a full-time employee in a contractual employment agreement, then it means that they work more than 30 hours a week and do have several benefits which other employees don’t receive.
  • Part-time: Part-time employees work less than full-time employees in a week. They do not have a fixed 30 hours for a week, and most have a structured working pattern.

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The features of an Employment Agreement/Contract

The Contractual Employment Agreement contains several essential clauses such as non-disclosure, security, confidential information protection, and non-solicitation.

The information in the Contractual Employment Agreement includes:

  • The parties involved and their details: The Contractual Employment Agreement mentions the names, address, identity, and working details of both the employer and employee to avoid any future altercations.
  • Job details and description: This means that the Employment Agreement will contain what type of job is being allotted and commenced, the initial duties and obligations. Any security questions or relations, if any, and probation period is also mentioned in the contractual employment agreement.
  • Salary: The pay structure of the employee must be thoroughly mentioned in the contractual employment agreement. Any commissions, bonuses, or overtime are also written, which also includes the payment period.
  • Working hours and leave obligations: stating the hours the employee needs to work and also their yearly leave, which is entitled (Sick, vacation, or personal necessity).
  • Restrictions imposed after the termination of the agreement:  This detains the employee from sharing any sensitive or confidential information anywhere else. Comprising the company’s security will not be tolerated, as the employee will be responsible for any damage due to the intentional leak of information. These restrictions are imposed after employment is over in the contractual employment agreement.
  • Employment agreement termination: The Contractual Employment Agreement will specify the charged or termination fees which both the parties will have to clear for termination of the agreement.
  • There may be some additional clauses mentioned in the Contractual Employment Agreement, which are mutually decided by the consent of both employer and employee. This contains various types of categories as they decide to input into the contract for a better understanding of the work.

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Who are the parties involved in a Contractual Employment Agreement?

In the contractual employment agreement, there are two parties mentioned. One is the employer, and the other is an employee. The Contractual Employment Agreement contains details of their identity, working responsibilities, and obligations as required for safeguarding their rights both as a worker and a company.

Disputes about Contractual Employment Agreement

There are several types and natures of disputes which may arise with a Contractual Employment Agreement that leads to termination of the contract.

  • Voluntary termination: This happens when the employee themselves resign from the company, or they voluntarily terminate the contract due to some procured issues. It also happens when the employee fails to return to work after the leave duration or is unable to commence with the type of job provided or allotted.
  • Involuntary termination:  It is when the company takes action against indiscipline and layoffs. The work ethic of the employee matters when they enter an agreement, and any unsatisfactory work and missed warnings can lead to involuntary termination of the contractual employment agreement.

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The Contractual Employment Agreement is a binary agreement between the two parties, i.e., employer and employee, which mentions the obligations, rights, and responsibilities towards each other in terms of the company.

The Contractual Employment Agreement has a lot of advantages, but the main one is that the execution of such an agreement allows protection for both parties in a legal manner by specifying the details of employment to ensure compliance under the law. It is imperative to thoroughly understand the terms and conditions before entering into agreements and seek legal advice when necessary to avoid complications.

The contract expires on a specified time and period, which is mentioned in the agreement for both parties. This is when the post-employment clause comes into action and may remain as such for years. Taking legal advice on such matters will be in the best interest of both parties to mitigate any risks involved.

Adv. Priyanka Sampathy

Adv. Priyanka Sampathy


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Priyanka Sampathy is a legal consultant who prioritises ethical and professional conduct while striving to achieve desired outcomes. With over 15 years of independent practice, she has significant expertise in handling legal cases. Her exceptional communication skills enable her to express arguments in a clear and persuasive manner, both in writing and verbally, in Hindi, English, and Telugu.

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