Employment Contract

What a startup employment agreement should cover.

Also known as: employment contract, offer letter, employment agreement

An employment contract sets compensation, role, confidentiality, IP ownership, non-compete boundaries (where enforceable), termination terms and working arrangement. For startups it does double duty: protecting the company (IP, confidentiality, non-solicitation) and selling the candidate (clarity signals seriousness to people leaving safe jobs).

must cover:  role + compensation (gross AND net) · IP assignment · confidentiality
             termination + notice · equity terms if any · governing law

Use local templates reviewed by local counsel — employment law varies enormously (Indonesia’s PKWT/PKWTT fixed-term vs permanent distinction, probation rules, severance). A US template applied in Jakarta (or vice versa) misstates rights both sides rely on.

The classic mistakes:

Verbal offers with details “to follow”. Salary misunderstandings (gross vs net!), role ambiguity and start-date drift all breed before day one. Written offer before resignation from their old job — always.
Missing IP/confidentiality clauses. The default hire without assignment leaves inventions ambiguous. Every contract assigns IP and binds confidentiality (IP assignment).
Overreaching restrictions. Absurd non-competes and perpetual non-solicits repel good hires and often fail legally. Restrict narrowly what genuinely needs protecting.
Probation without process. Probation periods need evaluation criteria and check-ins to be useful (and in some jurisdictions, to be lawful). Define success for the first 90 days in the contract’s shadow, reviewed monthly.
Equity promises in prose. “You’ll get options later” without plan, strike mechanics or timeline is a future dispute. Paper equity with the grant or do not mention it.

Template once, review per hire: standard contract reviewed by counsel, individualized annexes per role. See contractors for the non-employee version and PKWT/PKWTT for Indonesia’s contract types.