It denotes the minimum contents of a contract in order for it to be held effective and legally binding.
In contracts of employment, essential terms can include not just pay and a basic job description (the work-wage bargain) but also to specifics on holidays, a notice period in the event of dismissal, the place of work, any collective agreements and whether the job is expected to be permanent or a fixed term contract.
These are examples under European Union law, implemented under Directive 91/533 on an employer's obligation to inform employees of the conditions applicable to the contract of employment relationship.
An employer shall be obliged to notify an employee to whom this Directive applies hereinafter referred to as the "employee", of the essential aspects of the contract or employment relationship"All countries in the European Union are required to "translate" directives into national legislation.
In the English speaking world, this notion has not survived as well as in civil law jurisdictions, for the doctrine of consideration has essentially covered the requirement of essential terms in basic bargains.