To create the Employee Type
Go Employee → Employee Type

pos-hrm-employee-type
 

You can choose the common types example Permanent staff and click the edit to change or create new employee type. If new employee type, click New Type. You will see this screen.

pos-hrm-new-employee-type

Here you can create a new employee type, how many probation in days or contract in months together with a work pattern.
Also set the employee leave entitlement.