What Is the Purpose of an Employment Contract?

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Employment contracts are commonly used in three ways: to control the employee in some way, sweeten a job offer and guarantee at-will employment. However, employment contracts tend to be the exception rather than the rule.

Employers typically use contracts as a form of control. A contract contains the job description, the salary and the terms of employment. This may be the length of time required for an employee to stay with the company to avoid a penalty, or the length of time the job will last. Contracts can also include confidentiality agreements and non-compete agreements. Additionally, employers may use contracts to specify the standard for performance and grounds for termination. These agreements make it easier to fire employees who are not living up to the standards.