An employee may want an employment contract that includes compensation and benefits. The employment contract may list an expected salary and benefits as well as bonuses or incentives, such compensation details may not be possible without a contract. An employment contract sets out clear expectations as to what is required of each party. The «carriage» and «termination» provisions of the contract clearly show what constitutes satisfactory and unsatisfactory performance. The agreement also clearly states what the employer must do, i.e. grant a bonus by . B if an employee exceeds expectations. The hiring process, training, and benefits associated with hiring full-time employees can cost up to thousands of dollars. Many small businesses don`t have the resources to go through this process when they need manpower for a critical but limited project.

Hiring contract workers also saves money in the form of payroll taxes, as the independent contractor is responsible for paying their own payroll taxes to the IRS. An employment contract is a binding contract between an employer and his employee. The contract covers certain aspects of employment. These include salaries, health insurance benefits, pension benefits and premiums. The agreement provides reasons for termination. The agreement may also provide for severance pay in the event of dismissal of the employee. Employment contracts saw a significant increase in their popularity and use in the 1990s. Previously used almost exclusively by large companies to secure senior executives, contracts have become increasingly common in mid-sized companies, leading to a tendency to use these types of agreements to secure the services of mid-level executives and managers. Analysts cite the benefits that both parties derive from taking into account this recent increase in usage.

«As the employee-employer contract weakens, the employment contract has gained a tremendous amount of ground,» Gillian Flynn explained in Workforce. «A well-written contract can be a blessing for both parties. Employees feel safer and the company knows it has set limits on hiring, firing, paying and other sensitive details. Whether or not an employment contract is necessary or recommended for your employer-employee relationship is a complicated decision. .