Glints TalentHubLogin
Switch Language
HR Ops
Complete Guide to 7 Types of Employment Contracts
Safira Adnin
October 20, 2024

In today’s golden age of startups, it’s a great time for anyone looking to explore entrepreneurship. But while starting a business is exciting, it comes with plenty of responsibilities—especially when you’re aiming to grow beyond a solo venture.

Finding the right talent is tough, but keeping them can be even tougher. To build long-term working relationships, you need to offer attractive employment conditions that make people want to stay.

While verbal agreements still hold weight, employees today expect a written contract as part of their onboarding. It sets clear expectations from day one, protecting both the employer and the employee.

So, what goes into creating a solid employment contract? Understand the different types of contracts and how to match them with the right employee profiles to ensure a good fit.

What is an employment contract?

An employment contract is a formal agreement that sets the terms between you and your new hire. It defines what both parties can expect and sets the ground rules for a smooth working relationship.

Here’s what you should include in an employment contract:

  • Salary details: State the compensation amount and how often it’ll be paid.
  • Employment duration: Specify if it’s a permanent, temporary, or fixed-term role.
  • Medical benefits: Outline any medical, dental, or vision coverage offered.
  • Paid time off (PTO): Include details about vacation, sick leave, and personal days.
  • Full-time employee benefits: Mention perks like retirement plans, bonuses, and training opportunities.

Contracts may also cover confidentiality, non-compete clauses, and termination terms. They help prevent misunderstandings and provide clarity from the start.

Employment agreements can be written, oral, or implied—each serving different needs

Employment contracts can take different forms, each designed to suit the needs of both employers and employees. Here’s a quick rundown of the three main types:

1. Written Employment Contracts

This is the most formal type of agreement, clearly outlining terms and conditions in writing. Both parties sign it, ensuring legal protection and clarity. It often covers details like job duties, salary, duration, and benefits. Once signed, it becomes legally binding for the agreed timeframe.

2. Oral (Verbal) Employment Contracts

Verbal agreements rely on spoken promises and trust. While they may be seen as less formal, they’re still considered legally binding. As an employer, be cautious about what you promise verbally, as breaking an oral agreement could lead to legal action.

3. Implied Employment Contracts

These contracts arise from verbal statements, company policies, or practices that suggest certain job security or terms of employment. For example, if your company usually only dismisses employees after three warnings but fires someone after one, it could be seen as a breach of implied contract.

For all types of contracts, it’s essential to consult with HR or legal advisors to ensure compliance and avoid misunderstandings.

Type of AgreementDescriptionKey FeaturesProsCons
Written A formal, documented contract signed by both employer and employee.Clearly states job roles, responsibilities, salary, benefits, and terms of employment.Provides clear legal protection, reduces misunderstandings, and sets clear expectations.May require legal consultation; less flexibility for changes.
OralVerbal promises made between employer and employee, often sealed with a handshake.Based on mutual trust and clear communication of terms.Faster and more flexible for quick hiring; maintains trust-based relationships.Hard to prove in legal disputes; susceptible to misunderstandings.
Implied Unwritten expectations, inferred from company policies, behaviors, or statements.Derived from ongoing work patterns, consistent feedback, or established company norms.Reflects real-world job dynamics; can be more adaptable to changes.Legally ambiguous; can lead to disputes over expectations.

Why Employment Contracts Are Essential

Employment contracts are like the backbone of a solid working relationship between you and your employees. You could technically draft one on your own, but having legal advice helps make sure it follows the right laws and protects everyone.

Here’s why getting them right matters:

  1. Legal Safety Net
    These contracts aren’t just formalities—they’re legally binding agreements that protect both sides. Having clear terms ensures everyone’s rights are covered and helps you avoid any unexpected legal troubles down the road.
  2. Clear Expectations
    A well-written contract lays out everything from job responsibilities to performance standards and exit terms. It’s a win-win because both you and your employee know exactly what’s expected—no room for confusion.
  3. Simplifies Disputes
    Disagreements happen, but a solid contract makes resolving them way easier. It gives both parties something to fall back on, often including steps like mediation or arbitration if things go south.

Understanding Types of Employment Contracts by Duration

Employment contracts can vary based on how long they last. Here’s a simplified overview of the different types:

1. Permanent Employment Contracts

This type of contract doesn’t have an end date, meaning the employee works indefinitely unless either party decides to part ways. Employees on permanent contracts receive regular monthly salaries (or hourly pay) and are entitled to benefits like healthcare, paid leave, and career growth opportunities. Many companies use permanent contracts to attract and retain top talent.

2. Fixed-Term Contracts

These contracts have a set end date, usually six months or a year. They’re great for short-term needs like covering maternity leave or hiring interns. Employees on fixed-term contracts have the same rights as those with permanent contracts, including benefits and fair working terms. Fixed-term contracts can be renewed, but after four years, they must be converted to permanent contracts. Always inform fixed-term staff of any permanent job openings.

3. Casual Employment Contracts

Casual contracts work well when the work hours or tasks can’t be fixed upfront. These contracts specify the minimum number of expected working hours but leave room for flexibility as work demands change. Casual employees get paid holidays based on their actual hours worked and have rights like sick pay. If the workload becomes regular, make sure to inform them in writing and clarify any changes to their contract.

4. Zero-Hour Contracts

Zero-hour contracts don’t guarantee any set working hours. Employees are called to work as needed, often on short notice. While they have the option to decline work, in some cases, they may be required to accept all shifts offered. Despite the flexibility, zero-hour employees are still entitled to minimum wage and paid leave.


Finding the Right Contract for Every Hire

The classic nine-to-five work model is slowly becoming a thing of the past. With the rise of remote work and digital tools, companies are hiring talent from all corners of the world, adapting to different working styles along the way.

But that doesn’t mean full-time roles are going anywhere. They remain the backbone of most organizations, while new opportunities open up for those who prefer flexible schedules. The key is matching the right contract to the right role—let’s explore how.

Full-time and Part-time Contracts

Full-time employees typically work around 40 hours a week, but this varies by country. Meanwhile, part-timers work fewer hours but often still enjoy similar perks, like health insurance, paid leave, and overtime. Full-timers may receive more extensive benefits due to their longer hours.

Independent Contractors

Independent contractors are usually hired for specific projects or tasks rather than fixed schedules. They often work on a flat-fee basis, making them ideal for roles like freelancers, designers, or video editors. Contracts here should clearly outline project details, deadlines, and payment terms.

Trainees and Apprentices

For those eager to learn, an apprenticeship or trainee contract can be the perfect fit. These agreements outline training plans, working hours, start dates, and compensation, helping to set clear expectations and support professional growth.

Build your borderless team with Glints today

Glints TalentHub is our complete talent solution that covers all aspects of talent acquisition, management, and development. Our team can help you access the extensive talent pool across Southeast Asia and build great teams quickly and affordably. Simply schedule a call with us and our dedicated experts will be thrilled to guide you in your journey towards building a borderless team.


This article is brought to you by Glints TalentHub. Leading companies are actively building their borderless teams in Southeast Asia, Taiwan, and beyond. However, the prospect of going borderless can be daunting due to complex regulations and cultural ambiguities. With Glints TalentHub, you’ll have a dedicated team of in-market legal, HR, and talent experts by your side at every step of the way.

Glints TalentHub offers an end-to-end, tech-enabled talent solution that encompasses talent acquisition, EOR, and talent development. We empower businesses to leverage the strengths of regional talent efficiently to build high-performing, cost-efficient teams.

Schedule a no-obligation consultation with our experts to receive a tailored proposal today!


Join our Employers Community!
Subscribe to our newsletter to receive all our latest news and offers delivered right to your desk.

Featured Resource

Download Now

Connect With Us

Never miss a beat! Follow our social media channels for specially curated insights, knowledge and best practices to help you hire, retain and improve on your human capital.

Recent Posts