A woman with french nails manicure wearing a stripes pattern shirt takes the employee contract letter from a white envelope

An employee contract is something that a business owner needs to provide when recruiting employees. The employment contract needs to contain several elements that must be considered to avoid misunderstandings from both parties. Then, what are the elements that need to be included in the employment contract? Here's the explanation that can give you the answers!

What is a contract?

A contract is an agreement between two or more people which creates an obligation to do or not to take some action. Contracts are usually executed by the competent parties in mutually beneficial agreements. The contract is a written document containing the consent of the parties, with terms and conditions.

What is an employment contract?

An employee contract is an agreement between a worker and an employer that contains the terms of employment, rights, and obligations of the parties. The employment contract that we often know has standardized terms.

What to include in the employment contract?

An employee contract at least must include: 

  • Name of person being hired to work.
  • Name of the company hiring the employee.
  • Position description: employee’s role/s and responsibilities.
  • Compensation for the employee: the amount of money paid per hour, week, or month, including any overtime, bonus(es).
  • Date when the employee will start working in the company.
  • Working time the employee is expected to work. 
  • Benefits such as health insurance, vacation, sick days, and so on.

Types of Employment Contract

Who should sign the employee contract agreement and how to write an employment contract with terms and conditions

Permanent Employment Contract

A permanent employment agreement is a work agreement without a time limit. It means the period is until retirement age. In this type of work agreement generally, a company will do probation to the employee before signing the employment contract. The probationary period usually will be in three months. If the company wants to change the employee’s status to a permanent worker, then the company must renew the employment contract.

Temporary Employment Contract

Temporary employment agreements only have a maximum term of two years. It can be extended seven days before the contract expires. Therefore, there are several types of work that need fixed-time employment agreements such as seasonal and freelance.

Part-time Agreement

Generally, part-time workers have different working hours than full-time. Their working hours tend to be less and more flexible. The template of an employment contract for part-time workers is almost the same as full-time. The difference is the number of the working hours written in the contract.

Internship Agreement

Similar to the example of a work contract in general, the internship contract also has an agreement. Usually, this agreement only lasts as long as the worker does the internship at the company, which is from three to six months.

Writing an employee contract is somehow needs more effort as you have to aware of the local laws about employment terms and conditions in your current location. From now, you can download free contract templates from Loker Bali. Go have a look at our contract templates below!

Terms of Employment Contract

  • The employee contract letter must be following applicable law and etiquette.
  • The object of the agreement in the contract must be clearly explained.
  • The title of the contract in the agreement letter must be written concisely and clearly.
  • The parties involved in the agreement must be pronounced with their identities.
  • The agreement letter discusses the settlement mechanism in the event of a dispute.
  • Signed by both sides. 
  • There was a witness when both sides signed the contract.

Why need an employment contract?

Do you know that creating an employment contract for each newly hired employee has benefits for you and your employees? Here are a few reasons why you need to create an employment contract:

  • To ensure peace for the parties who signed the agreement
  • To prevent unwanted problems
  • To make everything legal and safe
  • Facilitate problem-solving by applicable law

Who should sign an employment contract?

A woman wearing a brown suit is signing the employment contract in front of the recruiter at the office

Who should sign the employee contract? Who has to be the first? Does it matter? 

Well, legally there are no rules for who has to sign the contract first as long as both sides agree. However, the terms and conditions in your agreement could be different based on the type of employee you’re hiring. 

There are a few things that you must consider before you sign the contract as a new employee:

  • Make sure you read carefully the entire contract and understand all of your responsibilities. Never sign a contract you don’t fully understand!
  • Make sure that you correctly identify the parties to the contract and the marital status. Use the complete name of the business to avoid confusion.
  • Make sure you understand what penalty you will get if you neglect the agreement. Determine the worst that can happen to you.
  • Review causes for termination. Make sure that you have possible reasons for termination, like moving out of the area, medical diagnosis, or injury.

How to write an employment contract?

A man is holding a pen while reading the employee contract agreement and ready to sign it


The most important thing to write a document is to include the title of an employment contract so the person who reads or signs will understand. You can name the document “Employment Agreement” or “Employment Contract of [Your Company Name]”.

Who are the parties?

Employee contracts usually mention which parties are taking part in the contract. Pay attention when writing down the names of your business and the candidates you’re hiring. 

Term and conditions

Some of the terms and conditions for the employment contract are set by governments. It’s important to check your local laws about the terms and conditions regarding employment. Other terms and conditions not included in in-laws are up to you to decide such as benefits, uniforms, and other terms.

Specific contract

Employment contracts generally have specific contract terms such as effective date, type of employment, and so on.

Consult with professional

After you’ve completed the draft of the employment contract, have a legal professional view the contract to make sure it’s in line with all related laws. You have to be concerned about this to protect your company from future legal action. 

That is the explanation about employee contract from the meaning until tips on how to make it. If you are looking for templates for the Contract or CV go visit Loker Bali and download templates for free!

Related Post
Dapatkan Notifikasi Lowongan Pekerjaan Terbaru
Platform paling canggih dan ramah pengguna untuk peluang kerja di Bali.
Hubungi Kami
Pulau Komodo I No. 4, Dauh Puri Klod, Denpasar Barat, Bali, 80114, Indonesia
Setiap Hari 09.00 am - 17.00 pm
+62 813 37558751
Tautan Cepat
2021. Loker-Bali oleh SATUVISION
crossmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram
This site is registered on wpml.org as a development site.