The employment contract: definition and characteristics

The employment contract: definition and characteristics


An employment contract is used by companies to organize the functions and responsibilities with their employees. In addition, it is an agreement between an employer and a worker, who has the obligation to provide their services by subordination in exchange for monetary compensation.

In short, it is a tool for the optimal functioning of the labor market, from which rights and duties are derived on both sides, and it is an important test in case of disagreement or violation of the conditions set forth in the contract.

In this Linexperts article, we will discover what the employment contract is and its main characteristics.

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Definition of employment contract

This is a legal and valid document that establishes the terms and conditions of the agreement between an employer and a worker previously signed. It also establishes the obligations and responsibilities of both parties such as salary, work schedules, benefits, vacation policies, confidentiality clauses, intellectual property and other information such as the time for which the employee will be hired, confidentiality of information, personal data protection policy, the base location where the employee is hired, employee and employer data, among others.

An additional, but not mandatory, element is the probationary period, a clause that specifies a period of time (maximum 2 months) in which the employee demonstrates his or her suitability for the job.

The employer may terminate the contract before the end of the probationary period without major consequences (the company does not have to compensate the employee).

It is important to note that in an employment contract there must be a relationship of subordination, i.e., the employee performs his activities under the employer's orders.

It can be verbal or written, although in many countries it is mandatory that it be established in writing, especially in the case of full-time and indefinite jobs.

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Who can sign an employment contract?

It is important to emphasize that the answer depends on the laws of each country, since in some countries the age of majority begins at 21, while in others it begins at 18.

Specifically in Colombia, a person may sign an employment contract if he/she has reached the age of majority (18 years old), if he/she is a minor, he/she needs permission from his/her guardian or parents.

If they are foreigners with a work permit, or with their papers in order according to the laws established at that time in the country where they are hired, such as work visas, foreigner's identity card, validation of degrees, among others.

Types of contracts

According to its formalization:

  1. Verbal: these are contracts carried out verbally, there is no document to prove the relationship. This type of contract is used in informal jobs, for example, informal salespersons, construction work in houses, etc. The disadvantage is that there is a risk of non-compliance.

  2. Written: When both parties agree to the employment relationship, a document is created where the working conditions are detailed. However, in practice, companies have their own format, they put the information of the new employee and he/she reads it before signing it.

According to its duration:

  1. Fixed term: is a type of employment contract in which a start date and an end date are established for the employment relationship. However, it may be automatically renewed under certain conditions.

  2. Indefinite term: no termination date is established for the employment relationship, which continues until one of the parties decides to terminate it.

  3. By work: a specific duration is established for the employment relationship, based on the completion of a particular project or task. It is commonly used by companies that need workers for a specific project and defined in time.

  4. Temporary or transitory: the duration of the work is established based on the time needed to meet the demand for work, and the working conditions, including salary, benefits and responsibilities of the worker. It is common in maternity replacements, vacations, etc.

  5. For the provision of services: here a commercial relationship is established between two independent parties and it is not an employment relationship. In this case, the contracted party is responsible for its own tax and social security obligations, and specific objectives and deliverables are established.

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Characteristics of an employment contract

The main characteristics of an employment contract are as follows:

  • Consensual: it is originated by the consent of both parties. Only a written form is required to enter into the agreements, although in specific cases it can also be done verbally.

  • Onerous: implies the transfer of an economic benefit, in this case a salary.

  • Successive tract: it is developed daily or constantly, according to a specific schedule.

  • Personnel: is not susceptible to delegation, for example, a worker who is sick cannot send a replacement that day to work for him. If there is substitution, another type of labor relationship is generated.

  • Subordinate: the employee is under the orders of his employer and must fulfill his tasks.

Elements of an employment contract

An employment contract has the following elements:

  1. Employer's data: includes the name of the company, address and NIT, name of the legal representative, identification.

  2. Employee data: the employee's name and identification, address, date of birth, address and nationality.

  3. Worker information: position or occupation, salary, pay periods (daily, weekly, biweekly, monthly in arrears), start date of work, place where the work will be performed.

  4. Clauses: these are terms that determine in detail the employee's responsibilities and the employer's obligations. Therefore, it includes:

    • Object of the contract.
    • Place where the service is provided.
    • Responsibility for entrusted assets.
    • Workday.
    • Night, supplementary, Sunday and holiday work (if applicable).
    • Remuneration.
    • Salary qualification agreement (if applicable).
    • Termination of the contract, just causes, special obligations.
    • Serious misconduct.
    • Justification for non-attendance.
    • Probationary period (if applicable).
    • Work ethics.
    • Duration of the contract.
    • Confidentiality.
    • Additional benefits
    • Additionally, it must be signed by the legal representative of the company and by the employee.

It is important to remember that the elements vary according to the format of each company, however, the above elements of an employment contract are the most important. If it is clear to you what an employment contract is and its main characteristics, we invite you to enjoy our blog, where we publish content of your interest. Remember that in Linexperts you have a space to find the best human talent to work towards your goals and objectives.


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