Staffing Up 101 pensation defined in the contract (ranging from a few months' salary to the rest of the contract). This right is often subject to the ex-employee's duty to mitigate , which means that the employee must look for comparable employment, which, if attained, would terminate the ex-employer's duties to pay out the balance of the contract. Other terms that need to go in the employment agreement include: Compensation A compensation package can have several components, the most common being salary, benefits, and incentive compensation (bonus, profit-sharing, royalty participation, and so forth). Figure 4.5. Compensating employees is more complicated than writing a check. Salary State explicitly the employee's annual salary, how it shall be paid (for example, in accordance with the company's payroll practices), and that it will be subject to all income and withholding taxes. The company will prefer not to specify raises or compensation review periods, but an employee will want