An employment contract is a documented agreement between an employer and an employee. It is legally binding. The main features of an employment contract are the job portfolio of the employee and the manner in which the employer will make monetary compensation. Companies have a standard format of employment contracts, which are given to all their employees. According to US law, any employee who has been working at least a month is entitled to an employment contract, which must be given to them within two months of commencement of the job.

An employment contract may run into several pages. The first page of the contract contains the names and addresses of both the employer and the employee. It also contains the name and address of the firm, company or institution where the employee is supposed to discharge duties. The date when the contract is made is recorded on the first page.

Following this, the contract contains a brief matter on the job which the employer is to render. The designation or post offered is mentioned. In express contracts, the description of the job portfolio could go in great detail, with a clause to clause explanation of various aspects of the job.

The remuneration to the employee is mentioned in clear terms. Either the salary figure is mentioned directly, or the factors on which payment will be based are mentioned. Period stipulations on payment such as hourly, daily, weekly, monthly, etc. are mentioned. The contract also contains other benefits and perks that the employer is entitled to. Along with these, there is mention of holiday entitlements, sickness benefits, maternity leaves, etc. If there are any reductions in the gross salary, such as due to taxes and insurance, they are also mentioned in the contract itself.

Since the contract is a mutually understood agreement, there may also be clauses that indicate under what circumstances they may be voided. Generally these clauses are at the discretion of the employer. These clauses may state termination of the job under cases of misconduct, low standard of work output, etc. Other disciplinary measures are mentioned in the contract itself.

An employment contract is legally binding on both the employer and the employee. However unsigned contracts and contracts with minors or mentally unstable persons are not recognized by US law.

Failure to obey any of the clauses of the contract by any of the parties involved constitutes breach of contract and it can be sued for in a court of law. The language in a contract must be lucid and clearly convey what is intended. Complex language may lead to misunderstanding and legal wrangles.