Compensation Agreement

The main difference between an employment contract and a compensation contract is that the latter is usually introduced when there is an existing document of the former. It is s used to negotiate further or to amend the existing terms of employment. An Employment Agreement covers all the introductory terms when a new employee joins a company.

High-level executives and managers may also use a Compensation Agreement to record their bonuses and other salary changes. This document could be alternatively called the Executive Compensation Agreement.

Many employers in the United States expect new hires to go through an evaluation period commonly known as the probationary period. This is done so before the employer extends all the benefits of employment like health insurance and worker’s comp, which can be costly to the employer if terminated early. During the period, the employer may let go of employees without notice or cause.

The non-competition clause stipulates that after termination a former employee is not to compete with the employer at the threat of penalty. This is as opposed to the non-solicitation clause that imposes at threat of penalty such that a former employee is not to solicit other employees at the company to perform work for them or otherwise leave the employer.

Even if you’ve worked at a company for a long time, you should still have a Compensation Agreement. If you are a contractor, for example, you are still due compensation after your contract is terminated. If anything untoward happens, it gets harder to prove your case if you don't have a written contract.