# Employment contract

An employment contract or contract of employment is a kind of contract used in labour law to attribute rights and responsibilities between parties to a bargain. The contract is between an "employee" and an "employer". It has arisen out of the old master-servant law, used before the 20th century. Employment contracts rely on the concept of authority, in which the employee agrees to accept the authority of the employer and in exchange, the employer agrees to pay the employee a stated wage (Simon, 1951).

## Terminology

A contract of employment is usually defined to mean the same as a "contract of service". A contract of service has historically been distinguished from a contract for services (contract for the supply of services). The differing terminology implies a dividing line between a person who is "employed" and someone who is "self-employed". The purpose of the dividing line is to attribute rights to some kinds of people who work for others. This could be the right to a minimum wage, holiday pay, sick leave, fair dismissal, a written statement of the contract, the right to organise in a union, and so on. The assumption is that genuinely self-employed people should be able to look after their own affairs, and therefore work they do for others should not carry with it an obligation to look after these rights.
Following the unification of the city-states in Assyria and Sumer by Sargon of Akkad into a single empire ruled from his home city circa 2334 BC, common Mesopotamian standards for length, area, volume, weight, and time used by artisan guilds in each city was promulgated by Naram-Sin of Akkad (c. 2254–2218 BC), Sargon's grandson, including those of shekels. Codex Hammurabi Law 234 (c. 1755–1750 BC) stipulated a 2-shekel prevailing wage for each 60-gur (300-bushel) vessel constructed in an employment contract between a shipbuilder and a ship-owner. Law 275 stipulated a ferry rate of 3-gerah per day on a charterparty between a ship charterer and a ship-owner. Law 276 stipulated a 21⁄2-gerah per day freight rate on a charterparty, while Law 277 stipulated a 1⁄6-shekel per day freight rate for a 60-gur vessel.
In Roman law the equivalent dichotomy was that between locatio conductio operarum (employment contract) and locatio conductio operis (contract for services).
The terminology is complicated by the use of many other sorts of contracts involving one person doing work for another. Instead of being considered an "employee", the individual could be considered a "worker" (which could mean less employment legislation protection) or as having an "employment relationship" (which could mean protection somewhere in between) or a "professional" or a "dependent entrepreneur", and so on. Different countries will take more or less sophisticated, or complicated approaches to the question.

## Employee vs. independent contractor

An independent contractor is in business for him or herself providing services to other businesses and does not work for or under an outside authority. Independent contractors are contracted on a temporary basis and paid at the completion of a project upon which their contract will be terminated. An employee works for an organization and is covered by federal and state employment and labor laws, which entitles them to certain benefits such as social security, income tax withholdings, and workers compensation, among others per the United States government (U.S. Department of Health & Human Services, 2018).

## Types of Employment

Employment contracts define the type of employment, which fall into two categories: at-will employment and for-cause employment.

### For-Cause Employment

For-cause employees can only have their employment terminated for a just reason. The employer's decision to terminate an employee also must be reviewed by an independent body to ensure the termination was indeed just and provide protection for employees from unfair or arbitrary termination (Pitchford, 2005). The three largest classes of just-cause employees are federal and state employees, as well as union members.

### At-Will Employment

On the other hand, at-will employment does not require an employer to give any cause for termination. At-will employment is unique to the United States, as most countries require specific procedures for employment termination. At-will employment was considered common law in the United States prior to the nineteenth century as opposed to the standard employment law in England, which was the annual hiring rule or seasonal hiring. In 1877, Horace Wood wrote his treatise on employment titled Master and Servant, which is considered by some to be the origin of at-will employment in the US. However, critics of Wood indicate that he incorrectly cited the cases to support his claim that employers can discharge workers for any reason. Shortly after, courts across the country upheld his claim (Pitchford, 2005).
There are several theories as to why at-will employment became a legal standard in the US. According to Jay Feinman in The Development of the Employment at Will Rule, as a result of the Industrial Revolution and increasing economic pressures, courts adopted the rule because it favored employers who were trying to avoid mounting employment lawsuits. Employers did not want employees to have a voice because if they knew they could be dismissed at any point, they would be less likely to protest working conditions, wages, etc. At-will employment doctrine also maximized employers’ ability to decrease their workforce in times of economic contraction (Ballam, 1996).
A second theory, proposed by Sanford Jacoby, argues that trade unions were much weaker in the US than in England during this period, so the courts did not offer as much protection for the annual hiring rule. Additionally, white collar workers in England during the nineteenth century garnered much more protection from the English courts due to their higher status compared to white collar workers in the United States (Ballam, 1996).
More recently, Deborah Ballam argues in Exploding the Original Myth Regarding Employment-At-Will: The True Origins of the Doctrine that the employment-at-will rule was the norm throughout the history of the United States because the agriculturally based economy and labor market were not conducive to the English annual hiring rule. “Because of the extensive use of indentured servitude, slavery, and express contracts for specified terms, and because of the severe labor shortage, few laborers would have been in situations where the annual hiring rule could have applied,” (Ballam, 1996).

## Types of Employment Contracts

The two most common types of employment contracts include fixed-term and open-ended contracts.

### Fixed-Term Contract

Fixed-term contracts are used when an employer wishes to hire an employee for a specific amount of time that is agreed upon in advance. Also known as task contracts, a fixed-term contract can also be used for the completion of a specific task and the contract will be terminated automatically upon completion of the task. Either party may terminate the contract before the end of the specified term if appropriate notice is given by either side (University of Strathclyde, 2013).

### Open-Ended Contract

Conversely, an open-ended employment contract does not have a specified end date. Open-ended employment contracts are also called permanent, indefinite, or continuing contracts as they are typically used for long-term employment situations (University of Strathclyde, 2013). This type of employment contract may be terminated if either party gives appropriate notice to the other party or in specific instances such as health concerns, resignation, or misconduct.

## Structure

An employment contract should clearly define all terms and conditions of the employment relationship. The most common elements to any employment contract include the following:
* Terms of employment
* Employee responsibilities
* Employee compensation (i.e. wage/salary, benefits)
* Employment absence
* Dispute resolution
* Nondisclosure agreements
* Ownership agreements
* Assignment clauses
* Employment opportunity limitations
* Grounds for termination

## Common Clauses
### Scope of employment

Each employment contract contains a job description including the range of activities that an employee is reasonably expected to perform. Scope of employment often identifies demotion, transfer to different responsibilities, and modification or increasing current responsibilities. Travel and relocation can also be discussed in this section.

### Compensation and benefits

Compensation includes a negotiated base salary or earning potential for an employee, performance incentives, production bonuses, signing bonuses, equity, and stock options. Benefits include insurance (health, life, vision and dental), pension plans, paid time off, vacation time, sick and personal leave. This section will also include if or when an employee's salary can be reduced for instances such as suspension or company financial distress.

### Probationary period

Some companies begin employment with new employees on a probationary basis. An employee is hired for a trial period that gives the company an opportunity to evaluate an employee's job performance and conduct. The duration of the trial period, training guidelines and assessment standards should be outlined in this section. If an employee's performance is found to be unsatisfactory, the employer can terminate the employee at the end or before the completion of the probationary period. This section should also detail how the employer will inform the employee if they wish to continue the employment at the end of the probationary period. A probationary period can only be extended if agreed by both parties or if the employment contract allow it.

### Non-competition

A non-competition clause prevents an employee from taking a position with a competitor of their employer following the termination of employment. The employer must have a legitimate interest in restricting the employee from future employment and the clause must be reasonable in time, activities, and geographic area.

### Non-solicitation

A non-solicitation clause prevents an employee from soliciting the employer's clients, customers, or employees for his or her own benefit. The employee also cannot solicit the employer's clients, customers, or employees for a period of time after the termination of the agreement. This section protects the employer's information and tries to ensure company loyalty.

### Non-disclosure

Under a non-disclosure or confidentiality clause, the employee agrees to not disclose information that the employer deems confidential or sensitive to the business and to take reasonable steps to prevent disclosure. Non-disclosures are commonly used to protect trade secrets, client information and other valuable information. A non-disclosure agreement can continue indefinitely or can include a duration clause that stipulates an end date of the agreement.

### Moonlighting & best efforts

A moonlighting clause details the employer's expectation that an employee with treat their employment with the business as their primary job and that other jobs will not interfere with their job performance. In some cases, a moonlighting clause will go as far as to specify that an employee cannot hold any other form of employment other than with their employer. The employer can also require an employee to report any outside work.

### Intellectual property

An employer can assign all work products and intellectual property created by an employee during their term of employment is an exclusive right of the employer. This clause pertains to inventions that relate to the company's past, present or reasonably foreseeable future business or research endeavors. Employers can claim the rights to inventions that were created using company resources, including confidential information, regardless of if they were developed during normal work hours.

### Arbitration

This clause specifies that the employer and employee will resolve disputes outside of court and with an arbitrator. In arbitration, the disputing parties each present their side of an issue to an arbitrator who will act like a judge and decide the matter without a jury. The court will then enforce the arbitrator's binding decision on the dispute.

### Termination

The term of the contract should be included in this section, detailing a specific time after which the contract will be terminated or no longer be enforceable. Renewals can be included as automatic with options not to renew or can be elective by both parties mutually.

## Legal Implications

With at-will employment, employers must be wary of legal issues that could potentially arise from wrongful termination.

### Civil Rights Act of 1964

Employees in the United States are protected under Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on race, color, religion, sex or national origin (Prenkert et al., 2019). Title VII covers all employers with 15 or more employees and who are engaging in an industry affecting interstate commerce. Employers include individuals, partnerships, colleges and universities, labor unions and employment agencies, as well as state and local governments. Title VII prohibits two theories of employment discrimination: disparate treatment and disparate impact. Disparate treatment occurs when an employer treats an employee differently because of the employee's protected status. Disparate impact occurs when an employer's policies or practices are seemingly neutral regarding protected statuses and have a disproportionate negative impact on members of one of those groups (Prenkert et al., 2019).

### Americans with Disabilities Act of 1990

Wrongful termination lawsuits can also arise from violating the Americans with Disabilities Act of 1990, which protects both individuals who can perform the essential functions of their job despite their disability and those who need a reasonable accommodation to perform their duties (Prenkert et al., 2019). Reasonable accommodation includes making existing facilities readily accessible and usable, acquiring new equipment, restricting job, modifying work schedules, and reassigning workers to vacant positions. However, employers do not need to make accommodations that would create undue hardships. An act requiring significant difficulty or expense (Prenkert et al., 2019).

### Fair Labor Standards Act

The Fair Labor Standards Act also affects employers and employment contracts in that it establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. The FLSA applies only to employers whose annual sales total $500,000 or more or who are engaged in interstate commerce (U.S. Department of Labor, n.d.).

### Respondeat Superior

Lawsuits can arise as well from Respondeat Superior Liability or vicarious liability. Respondeat Superior is the legal doctrine that in Latin means “let the master answer." Respondeat Superior holds an employer legally responsible for the wrongful acts of an employee or agent if such acts occur within the scope of the employment or agency. A court will apply the doctrine regardless of how closely the employer was monitoring the employee. Respondeat Superior applies to employees, but not to independent contractors.

## Criticism

Part of a series on :
Anarchism :
Glossary
History
Outline :
Schools of thought
Black
Feminist
Green
Primitivist
Social ecology
Total liberation
Individualist
Egoist
Market
Philosophical
Mutualist
Queer
Religious
Christian
Jewish
Social
Collectivist
Parecon
Communist
Magonism
Without adjectives
Methodology
Counter-economics
Illegalism
Insurrectionary
Pacifist
Platformism
Relationship
Syndicalist
Synthesis :
Theory
Practice
Anarchy
Anarchist Black Cross
Anarchist criminology
Anationalism
Anti-authoritarianism
Anti-capitalism
Anti-militarism
Affinity group
Autonomous social center
Black bloc
Classless society
Class struggle
Consensus decision-making
Conscientious objector
Critique of work
Decentralisation
Deep ecology
Direct action
Free love
Freethought
Horizontalidad
Individualism
Law
Mutual aid
Participatory politics
Permanent autonomous zone
Prefigurative politics
Proletarian internationalism
Propaganda of the deed
Refusal of work
Revolution
Rewilding
Sabotage
Security culture
Self-ownership
Social ecology
Sociocracy
Somatherapy
Spontaneous order
Squatting
Temporary autonomous zone
Union of egoists
Voluntary association
Workers' council :
People
Alston
Armand
Ba
Bakunin
Berkman
Bonanno
Bookchin
Bourdin
Chomsky
Cleyre
Day
Durruti
Ellul
Ervin
Faure
Fauset MacDonald
Ferrer
Feyerabend
Giovanni
Godwin
Goldman
González Prada
Graeber
Guillaume
He-Yin
Kanno
Kōtoku
Kropotkin
Landauer
Liu
Magón
Makhno
Maksimov
Malatesta
Mett
Michel
Most
Parsons
Pi i Margall
Pouget
Proudhon
Raichō
Reclus
Rocker
Santillán
Spooner
Stirner
Thoreau
Tolstoy
Tucker
Volin
Ward
Warren
Yarchuk
Zerzan :
Issues
Animal rights
Capitalism
Education
Love and sex
Nationalism
Religion
Violence :
History
French Revolution
Revolutions of 1848
Spanish Regional Federation of the IWA
Paris Commune
Hague Congress
Cantonal rebellion
Haymarket affair
International Conference of Rome
Trial of the Thirty
International Conference of Rome
Ferrer movement
Strandzha Commune
Congress of Amsterdam
Tragic Week
High Treason Incident
Manifesto of the Sixteen
German Revolution of 1918–1919
Bavarian Soviet Republic
1919 United States bombings
Biennio Rosso
Kronstadt rebellion
Makhnovshchina
Amakasu Incident
Alt Llobregat insurrection
Anarchist insurrection of January 1933
Anarchist insurrection of December 1933
Spanish Revolution of 1936
Barcelona May Days
Red inverted triangle
Labadie Collection
Provo
May 1968
Kate Sharpley Library
Carnival Against Capital
1999 Seattle WTO protests
Really Really Free Market
Occupy movement :
Culture
A las Barricadas
Anarchist bookfair
Anarcho-punk
Arts
DIY ethic
Escuela Moderna
Films
Freeganism
Infoshop
Independent Media Center
The Internationale
Jewish anarchism
Lifestylism
May Day
"No gods, no masters"
Popular education
"Property is theft!"
Radical cheerleading
Radical environmentalism
Self-managed social center
Symbolism :
Economics
Communisation
Cooperative
Cost the limit of price
Decentralised planned economy
Free association
General strike
Gift economy
Give-away shop
Labour voucher
Market socialism
Mutual bank
Mutual credit
Social ownership
Wage slavery
Workers' self-management :
By region
Africa
Albania
Algeria
Andorra
Argentina
Armenia
Australia
Austria
Azerbaijan
Bangladesh
Belarus
Belgium
Bolivia
Bosnia and Herzegovina
Brazil
Bulgaria
Canada
Chile
China
Colombia
Costa Rica
Croatia
Cuba
Cyprus
Czech Republic
Denmark
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Finland
France
French Guiana
Georgia
Germany
Greece
Guatemala
Hong Kong
Hungary
Iceland
India
Indonesia
Iran
Ireland
Israel
Italy
Japan
Korea
Latvia
Malaysia
Mexico
Monaco
Mongolia
Morocco
Netherlands
New Zealand
Nicaragua
Nigeria
Norway
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Puerto Rico
Romania
Russia
Serbia
Singapore
South Africa
Spain
Sweden
Switzerland
Syria
Taiwan
Timor-Leste
Tunisia
Turkey
Ukraine
United Kingdom
United States
Uruguay
Venezuela
Vietnam :
Lists
Anarcho-punk bands
Books
Fictional characters
Films
Jewish anarchists
Musicians
Periodicals :
Related topics
Anti-corporatism
Anti-consumerism
Anti-fascism
Anti-globalisation
Anti-statism
Anti-war movement
Autarchism
Autonomism
Communism
Definition of anarchism and libertarianism
Dual Power
Labour movement
Left communism
Left-libertarianism
Libertarianism
Libertarian socialism
Marxism
Relationship between Friedrich Nietzsche and Max Stirner
Situationist International
Socialism
Spontaneous order :
Anarchism portal
Politics portal :
vte :
Anarcho-syndicalists and other socialists who criticise wage slavery, e.g. David Ellerman and Carole Pateman, posit that the employment contract is a legal fiction in that it recognises human beings juridically as mere tools or inputs by abdicating responsibility and self-determination, which the critics argue are inalienable. As Ellerman points out, "[t]he employee is legally transformed from being a co-responsible partner to being only an input supplier sharing no legal responsibility for either the input liabilities [costs] or the produced outputs [revenue, profits] of the employer's business." Such contracts are inherently invalid "since the person remain[s] a de facto fully capacitated adult person with only the contractual role of a non-person" as it is impossible to physically transfer self-determination. As Pateman argues:
   The contractarian argument is unassailable all the time it is accepted that abilities can 'acquire' an external relation to an individual, and can be treated as if they were property. To treat abilities in this manner is also implicitly to accept that the 'exchange' between employer and worker is like any other exchange of material property. . . The answer to the question of how property in the person can be contracted out is that no such procedure is possible. Labour power, capacities or services, cannot be separated from the person of the worker like pieces of property.
According to some law scholars, generally, the contract of employment denotes a relationship of economic dependence and social subordination. In the words of the controversial labour lawyer Sir Otto Kahn-Freund,
   "the relation between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of power. In its inception it is an act of submission, in its operation, it is a condition of subordination, however much the submission and the subordination may be concealed by the indispensable figment of the legal mind known as the 'contract of employment'. The main object of labor law has been, and... will always be a countervailing force to counteract the inequality of bargaining power which is inherent and must be inherent in the employment relationship."