Types Of Employment Contracts: What You Need To Know (2026)

What Is an Employment Contract?

Employment contracts are a key part of employment law. These contracts outline the terms of the relationship between employer and employee, and they are legally binding.

Types of Employment Contracts

There are many types of employment contracts, but these are seven of the most common:

• Full-time
• Part-time
• Freelance/independent contractor
• Temporary/fixed-term
• Casual employment
• Open-ended employment
• At-will

Here’s a closer look at how each one works:

Full-Time Contract

These contracts are usually offered to employees who work 35-40 hours per week. Most full-time employment contracts include insurance and other benefits.

It’s important to note that full-time employment doesn’t always come with a formal signed contract. Most states in the U.S. are at-will employment states. Many at-will jobs don’t involve written contracts, but the employee and employer both have the right to end the working relationship at any time and for (almost) any reason.

Contracts are more common in some positions and industries than others. For example, unionized employees and those in the education sector often have contracts. A senior executive may also be asked to sign an executive employment agreement before starting with a new company.

Part-Time Contract

Part-time contracts are for employees working less than a full workweek. These contracts offer flexibility, but they usually don’t come with benefits. Some employers may offer part-time employees some amount of paid time off or other fringe benefits, but these aren’t guaranteed.

Freelance/Independent Contractor Contract

If a business works with someone who is self-employed, they may create a freelance contract. Many of these contracts are project-based.

Depending on the industry and the nature of the work, a freelance or independent contractor contract will usually include the following:

• Names and basic contact information for the freelancer and the client
• A clear statement that the work is performed on a freelance basis (and the contractor is responsible for their own taxes and benefits)
• The scope of work to be done
• The timeline of the work
• Compensation rates and payment terms

Freelance contracts may also detail whether the client owns the intellectual property created or if the freelancer will license it to them.

Temporary/Fixed-Term Contract

These limited-term contracts are typically project-based as well. However, unlike freelance contracts, they are given to employees of a business.

Casual Employment Contract

Casual employment contracts (sometimes called "zero-hour" contracts) are for those who work with a business on an as-needed basis.

Open-Ended Employment Contract

With open-ended employment contracts, there is no set end date, but the employer or employee may terminate the relationship if desired.

At-Will Contract

Most states (with the exception of Montana) are at-will employment states. This means either party may end the relationship for any legal reason.

How Are Employment Contracts Delivered?

There are a few ways that different types of employment contracts may be delivered:

• Written contracts outline all employment terms and are signed by both parties.
• Verbal contracts are discussed but not put in writing.
• Implied contracts are created by an employer’s behavior but are not explicitly stated.

Verbal and implied contracts can be hard to prove in court. As a result, it’s often better to offer written contracts.

Essential Elements Every Employment Contract Should Include

A contract should clearly outline the relationship between employee and employer. It should at least include the following:

• Job title and duties
• Compensation
• Benefits (if applicable)
• Start date and schedule
• Termination or resignation terms
• Confidentiality provisions
• Dispute resolution procedures

Dispute resolution clauses are especially important because they may save you the time, stress and hassle that often come with litigation. For example, if your employment contract requires that you and the employee go through mediation before going to court, you could potentially resolve the issue faster and with much lower legal fees.

To avoid legal issues, employers should always work with an attorney to draft employment contracts.

How to Choose the Right Employment Contract

The right employment contract depends on your sector, your individual business and the role you’re hiring for. The best way to decide is to discuss your situation with an employment lawyer.

If you want to know more, ConsumerShield can help! We’re here to offer employers and employees the legal knowledge they need. Whether you have questions about employment law, consumer law or something else, take a look at our resources and forms!