When starting a new job, one of the most important documents you will encounter is the employment contract. This legally binding agreement outlines the terms and conditions of your employment, including your job duties, compensation, benefits, and termination procedures. But how exactly is an employment contract formed? Let’s take a closer look.

Offer and Acceptance

At its core, an employment contract is formed through a process known as offer and acceptance. The employer offers you a job, typically through an offer letter or verbal communication, and you accept the terms of the offer. This creates a mutual understanding of the terms and conditions of your employment.


For an employment contract to be legally enforceable, there must be consideration, or something of value exchanged between the parties. In the case of employment contracts, the consideration is typically your services as an employee and the employer’s promise to compensate you for those services.

Mutual Agreement

Both parties must agree to the terms and conditions of the employment contract. This means that you and your employer must be on the same page regarding your job duties, work schedule, compensation, and other terms. Any disputes or misunderstandings should be resolved before signing the contract.

In Writing

While employment contracts can be formed verbally, it is always best to have the terms in writing. This way, there is no ambiguity or confusion regarding the expectations and obligations of both parties. A written employment contract should be signed by both you and your employer to indicate mutual agreement.

Legally Binding

Once all the necessary elements are in place, an employment contract becomes a legally binding agreement. This means that both you and your employer are obligated to uphold the terms and conditions of the contract. Failure to meet your obligations could result in legal consequences.

In conclusion, an employment contract is formed through offer and acceptance, consideration, mutual agreement, and in writing. It is important to carefully review the terms and conditions of your employment contract before signing to ensure that you understand your rights and obligations as an employee. If you have any questions or concerns, don’t hesitate to seek legal advice.