The compensation agreement describes a person`s terms and conditions of employment in the company, including when an employee is newly hired or receives a salary increase. As a general rule, contract employees are not employed for employees after giving their consent. If a new business asks you to sign a compensation agreement, review it carefully to make sure you agree to the terms and conditions provided. Many states also recognize that an oral statement from an employer, such as “You`ll be here as long as your sales are over budget,” can create a binding employment contract. However, the applicability of these oral contracts is limited by a legal doctrine known as the Fraud Act, which provides that any oral agreement that cannot be executed in less than one year is void. Employment contracts, whether written or implied from employee manuals or policies, can also include the terms: employment contracts and compensation agreements are useful when you need to control the employee`s ability to get out of your company. .