Glossary of Human Resources Management and Employee Benefit Terms
Conditions of employment are the rules, requirements, and policies an employer and employee agree to abide by during the employee’s service to the company. They spell out the rights and obligations of each party. Conditions of employment are also known as terms of employment.
Conditions of employment are often found in job postings, employee handbooks, and company policy manuals. Conditions of employment are also spelled out in written employment contracts, but many positions are filled with nothing more than a verbal agreement—which can raise legal issues if the employer and employee later disagree about what was promised. For clarity and consistency, and to reduce potential liability, it’s important for complete conditions of employment to be written down and made available to every employee.
The marketplace and the law hold the most sway in determining a company’s conditions of employment.
In the free market, employers who compete to hire employees from a limited talent pool must provide appealing conditions of employment to attract and retain them, such as a competitive compensation package.
As for the law’s influence, conditions of employment must comply with myriad federal and state legal requirements regarding such important matters as worker safety, healthcare access, and non-discrimination policies.
In some industries, unions may also negotiate certain conditions of employment on behalf of their members.
Conditions of employment may include some stipulations that are job-specific and others that apply to all company employees. Examples of job-specific conditions of employment include:
Days and hours of employment
Whether the employee is exempt or non-exempt
Job description and duties
How disputes will be resolved
Benefits not all employees receive, such as extra vacation time or profit sharing
Job-specific conditions of employment are often negotiable. Executives and workers with skills that are in high demand may arrange more favorable terms than others.
Examples of company-wide conditions of employment include:
Dress code policies
Performance review requirements
Standard benefits information, such as health insurance and retirement plans
Generally, employers can modify conditions of employment as they see fit as long as they don’t break any laws by doing so. Such changes could include anything from adding paid paternity leave to reducing salaries. But written employee contracts are different—they remain binding on both parties. The terms must be honored for the duration of the contract unless both employer and employee agree to renegotiate.