Terms of employment refer to the responsibilities and benefits associated with a job as agreed upon by an employer and employee at the time of hiring. These terms generally include job responsibilities, work hours, dress code, time off, and starting salary. They may also include benefits such as health insurance, life insurance, and retirement plans.
Although terms of employment can be agreed upon verbally, it is common for employees and employers to sign written contracts. However, if you are an at-will employee, your employer can change the terms of employment, including your salary, hours, and worksite, at any time.
Key Points to Remember
- Terms of employment are the benefits and responsibilities agreed upon when accepting a job.
- They may include salary, benefits, retirement, company policies, and termination agreements.
- Executives and highly skilled workers often have more bargaining power over their employment terms.
- The minimum terms of employment are set by the U.S. Department of Labor.
How Terms of Employment Impact You
Most employers require professional and administrative employees, as well as executives, to sign a written employment agreement or contract that details the terms of employment. Conditions for hourly employees are often outlined in an employee handbook or company policy manual. Sometimes, terms can also be expressed verbally, though written agreements better protect both parties.
Beyond salary and benefits, terms of employment can also cover dispute resolution, nondisclosure agreements, and grounds for termination, including notices of termination.
Job seekers with in-demand skills can frequently negotiate better terms of employment. Whether it’s an executive role or an entry-level job, state and federal guidelines may still apply.
Minimum standards for terms of employment in the U.S. are set by the Department of Labor (DOL) and include rules on minimum wage, overtime, the standard workweek, mandated breaks, and safety protocols. Certain industries like agriculture, mining, and construction have additional specific guidelines. Besides federal regulations, state laws might offer further benefits or protections.
Always read the entire employment contract offered by a prospective employer before signing, and consider seeking legal advice if unsure.
Points of Consideration
In the U.S., employment contracts are generally at-will, meaning either the employer or employee can terminate the agreement at any time for almost any reason, except as restricted by discrimination laws. Employees with contracts typically have job security for the length of the contract as long as they do not violate its terms.
Montana stands out as the only state where at-will laws do not apply, and thus, employees can only be terminated for good reason.
The at-will rule does not apply to individuals who are members of labor unions. Unions negotiate benefits and other employment conditions, including termination terms, under collective bargaining agreements, offering employees more stability.
Employment Terms Around the Globe
Most developed and developing countries have standardized terms of employment. For instance, Ireland’s Terms of Employment (Information) Act covers various workplace and labor guidelines. Australia’s Fair Work Ombudsman sets rules related to pay, leave, redundancy, entitlements, and more.
U.S. labor laws are generally less generous compared to other parts of the world. The European Union mandates at least four weeks of vacation for workers every year. In Finland, expectant mothers get paid leave of at least six weeks before their due date and 15 weeks after childbirth. Your employment benefits might differ significantly based on where you are employed, and high expectations might not always match the terms offered.
Related Terms: employment contract, at-will employment, labor unions, collective bargaining.
References
- U.S. Department of Labor. “Wages and the Fair Labor Standards Act”.
- U.S. Department of Labor. “Employment Law Guide”.
- U.S. Department of Labor. “State Labor Laws”.
- Legal Information Institute. “Employment-at-Will Doctrine”.
- Montana Department of Labor & Industry. “Wage and Hour FAQs”.
- Workplace Fairness. “All About Unions”.
- Government of Ireland. “Terms of Employment (Information) Act, 1994”.
- Australian Government. “Fair Work Ombudsman”.
- The European Union. “Working Hours”.
- The European Union. “Employment, Social Affairs, and Inclusion: Finland – Maternity and Paternity”.
