EMPLOYEE MATTERS AGREEMENT

EXHIBIT 10.6

EMPLOYEE MATTERS AGREEMENT

BETWEEN

HALLIBURTON COMPANY

and

KBR, INC.

Dated November 20, 2006

TABLE OF CONTENTS

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EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT (this “ Agreement ”) is entered into as of the 20th day of November, 2006 by and between Halliburton Company, a Delaware corporation (“ Halliburton ”), and KBR, Inc., a Delaware corporation (“ KBR ”).

WHEREAS, the Board of Directors of Halliburton has determined that it is in the best interests of Halliburton and its shareholders to make an initial public offering (“ IPO ”) of shares of KBR common stock, par value $0.001 per share;

WHEREAS, in order to effectuate the foregoing, Halliburton and KBR have entered into a Master Separation Agreement, dated as of the date hereof (the “ Separation Agreement ”), which provides, among other things, subject to the terms and conditions thereof, for the Separation, the IPO, and the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the foregoing; and

WHEREAS, in order to ensure an orderly transition under the Separation Agreement it will be necessary for Halliburton and KBR to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, benefit plans and programs, and certain employment matters.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Wherever used in this Agreement, the following terms shall have the meanings indicated below, unless a different meaning is plainly required by the context. The singular shall include the plural, unless the context indicates otherwise. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Separation Agreement. Headings of sections are used for convenience of reference only, and in case of conflict, the text of this Agreement, rather than such headings, shall control:

“ Agreement ” means this Employee Matters Agreement and all amendments made hereto from time to time.

“ Benefit Liabilities ” means all claims, causes of action, demands, liabilities, debts or damages (known or unknown) related to (i) any Plans, (ii) any arrangements or services that are the subject of this Agreement, and (iii) all employment matters, including but not limited to claims arising under foreign law and federal, state or local statute, claims in connection with workers’ compensation or “whistle blower” statutes and/or contract, tort, defamation, slander, wrongful termination or any other state or federal regulatory, statutory or common law or local ordinance.

“ Board(s) ” means the Board of Directors of Halliburton and/or the Board of Directors of KBR, as the context indicates.

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“ Canadian Plans ” means the Halliburton Group Canada Inc. Profit Sharing Pension Plan, the Halliburton Group Canada Inc. Retirement Income Plan, the Halliburton Group Canada Inc. Registered Retirement Savings Plan, the Halliburton Group Canada Inc. Non-registered Retirement Savings Plan and any other plans intended to provide retirement benefits maintained in Canada by Halliburton or any of its Subsidiaries for the benefit of Halliburton Employees and in which any KBR Employee participates as of the IPO Closing Date.

“ COBRA ” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time, and as codified in Section 4980B of the Code and ERISA Sections 601 through 608.

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.

“ Deconsolidation Date ” shall have the meaning set forth in the Tax Sharing Agreement.

“ DOL ” means the United States Department of Labor.

“ Energy Services Group ” means Halliburton Energy Services, Inc., a Delaware corporation, and its Subsidiaries.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ FMLA ” means the Family and Medical Leave Act of 1993, as amended from time to time.

“ Group ” shall have the meaning set forth in the Separation Agreement.

“ Halliburton ” means Halliburton Company, a Delaware corporation. In all such instances in which “Halliburton” is referred to in this Agreement, it shall also be deemed to include a reference to each member of the Halliburton Group, unless it specifically provides otherwise.

“ Halliburton Business ” shall have the meaning set forth in the Separation Agreement.

“ Halliburton Employee ” means any individual who is employed in the Halliburton Business during the relevant time period.

“ Halliburton Group ” shall have the meaning set forth in the Separation Agreement.

“ Halliburton Non-Qualified Plans ” means the Halliburton Elective Deferral Plan, the Halliburton Company Supplemental Executive Retirement Plan, the Halliburton Company Benefit Restoration Plan, the Dresser Industries Inc. Deferred Compensation Plan, the ERISA Excess Benefit Plan for Dresser Industries Inc., the ERISA Compensation Limit Benefit Plan for

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Dresser Industries Inc., and any other plan, other than the Halliburton Qualified Plans, maintained by Halliburton or any of its Subsidiaries for the purpose of providing retirement benefits to any Halliburton Employee and in which any KBR Employee participates as of the IPO Closing Date.

“ Halliburton Qualified Plans ” means the Halliburton Retirement & Savings Plan, the Halliburton Savings Plan, the Halliburton Retirement Plan, the Pension Plan for United Steelworkers Local 6312 Guiberson, the Pension Plan for Participants of Certain Consolidated Discontinued Operations, the Pension Plan for Inactive Participants, the Petroleum and Minerals Operations Retirement Plan, the Retirement Plan for the USWA AFL-CIO on Behalf of the Local 6580, the Pension Plan for Hourly Employees of Axelson Operations, the Bariod Union Retirement Program, and any other plan intended to qualify under Section 401(a) of the Code maintained by Halliburton or any of its Subsidiaries for the benefit of Halliburton Employees and in which any KBR Employee participates as of the IPO Closing Date.

“ IPO ” has the meaning set forth in the Recitals hereof, as the same is further described in the Separation Agreement.

“ IPO Closing Date ” means the first date on which the proceeds of any sale of KBR Common Stock to the underwriters in the IPO are received.

“ IRS ” means the United States Internal Revenue Service.

“ KBR ” means KBR, Inc., a Delaware corporation. In all such instances in which KBR is referred to in this Agreement, it shall also be deemed to include a reference to each member of the KBR Group, unless it specifically provides otherwise; KBR shall be solely responsible to Halliburton for ensuring that each member of the KBR Group complies with the applicable terms of this Agreement.

“ KBR Business ” shall have the meaning set forth in the Separation Agreement.

“ KBR Common Stock ” shall have the meaning set forth in the Separation Agreement.

“ KBR Employee ” means any individual who is employed in the KBR Business during the relevant time period.

“ KBR Group ” shall have the meaning set forth in the Separation Agreement.

“ KBR Pension Plans ” means the Brown & Root, Inc. Employees’ Retirement and Savings Plan, the Brown & Root, Inc. Hourly Employees’ Pension Plan, the Brown & Root, Inc. Hourly Employees’ 401(k) Plan, the Halliburton NUS Corporation Employees’ Profit Sharing Plan, the Kellogg Brown & Root, Inc. Retirement and Savings Plan, the Halliburton NUS Corporation Employees’ Pension Plan, the Kellogg Brown & Root UK Limited Pension Plan, the MW Kellogg Limited Pension Scheme, the Devonport Dockyard Pension Scheme, and any other plan maintained by KBR or any of its Subsidiaries for the purpose of providing retirement benefits to any KBR Employee.

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“ Participating Company ” means: (a) Halliburton; (b) any Person (other than an individual) that Halliburton has approved for participation in, has accepted participation in, or which is participating in, a Plan sponsored by Halliburton; or (c) any Person (other than an individual) that, by the terms of such a Plan, participates in such a Plan sponsored by Halliburton or any employees of which, by the terms of such a Plan, participate in a Plan.

“ Pension Schemes ” means the Kellogg Brown & Root (UK) Ltd Pension Plan, the M.W. Kellogg Limited Pension Plan and the Devonport Royal Dockyard Pension Scheme.

“ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

“ Plan ” depending on the context, may mean any plan, policy, program, payroll practice, arrangement, contract, annuity contract, trust, insurance policy, or any agreement or funding vehicle providing compensation or benefits to employees, dependents of employees or former employees or non-employee and employee directors of Halliburton, KBR or any member of the Halliburton Group or the KBR Group. “Plan,” when immediately preceded by “Halliburton,” means a Plan sponsored by Halliburton or a member of the Halliburton Group. When immediately preceded by “KBR,” “Plan” means a Plan sponsored by KBR or a member of the KBR Group.

“ QDRO ” means a domestic relations order which qualifies under Section 414(p) of the Code and ERISA Section 206(d) and which creates or recognizes an alternate payee’s right to, or assigns to an alternate payee, all or a portion of the benefits payable to a participant under a plan qualified under Section 401(a) of the Code.

“ SEC ” means the United States Securities and Exchange Commission.

“ Separation ” shall have the meaning set forth in the Separation Agreement.

“ Separation Agreement ” means the Master Separation Agreement between Halliburton Company and KBR, Inc.

“ Subsidiary ” shall have the meaning set forth in the Separation Agreement.

“ Tax Sharing Agreement ” shall have the meaning set forth in the Separation Agreement.

“ Transferred Halliburton Employee ” means any individual who was previously employed in the KBR Business and then was transferred to work in the Halliburton Business on or prior to the IPO Closing Date and remained employed in the Halliburton Business as of the IPO Closing Date or did not return to work in the KBR Business prior to the IPO Closing Date.

“ Transferred KBR Employee ” means any individual who was previously employed in the Halliburton Business and then was transferred to work in the KBR Business on or prior to the IPO Closing Date and remained employed in the KBR Business as of the IPO Closing Date or did not return to work in the Halliburton Business prior to the IPO Closing Date.

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“ Transition Services Agreement ” means the Transition Services Agreement, which is attached as an exhibit to the Separation Agreement.

ARTICLE II

GENERAL PRINCIPLES

SECTION 2.1 KBR Plans .

(a) Non-Duplication of Benefits . Halliburton and KBR shall mutually agree, if necessary, on methods and procedures, including amending the respective Plan documents, to prevent employees of the KBR Group from receiving duplicate benefits from the Halliburton Plans and the KBR Plans.

(b) Service Credit . Except as specified otherwise in this Agreement or as required by applicable law, with respect to KBR Employees, each KBR Plan in existence on the IPO Closing Date shall provide that all service with the Halliburton Group as of the IPO Closing Date shall receive full recognition and credit and be taken into account under such KBR Plan to the same extent as if such service occurred with the KBR Group, except to the extent that duplication of benefits would result. The service crediting provisions shall be subject to any respectively applicable “service bridging,” “break in service,” “employment date” or “eligibility date” rules under the KBR Plans.

(c) Beneficiary Designations . Subject to Section 8.3 of this Agreement, all beneficiary designations made by the KBR Employees for the Halliburton Plans shall be transferred to and be in full force and effect under the corresponding KBR Plans until such time, if ever, that any such beneficiary designation is replaced or revoked by the KBR Employee who made the beneficiary designation. If no such beneficiary designations are on file, the terms of the applicable KBR Plan shall control.

(d) KBR Under No Obligation to Maintain Plans . Except as specified otherwise in this Agreement, nothing in this Agreement shall preclude KBR, at any time, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any KBR Plan, any benefit under any KBR Plan or any trust, insurance policy or funding vehicle related to any KBR Plan (to the extent permitted by law) in accordance with the applicable governing plan documents.

(e) Halliburton Participation in KBR Plans . Unless the prior written consent of KBR is obtained, Halliburton Employees shall not participate in any KBR Plans.

SECTION 2.2 Halliburton Plans .

(a) KBR’s Participation in Halliburton Plans . After the IPO Closing Date, KBR shall continue to be a Participating Company in the Halliburton Company 2002 Employee Stock Purchase Plan, the Halliburton Company 2002 Non-Qualified Stock Purchase Plan, the Halliburton Company UK Employee Share Purchase Plan, the Halliburton Elective Deferral Plan, the Halliburton Company Supplemental Executive

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Retirement Plan, the Halliburton Company Benefit Restoration Plan, the Halliburton Group Canada Inc. Retirement Income Plan, the Halliburton Group Canada Inc. Registered Retirement Savings Plan and the Halliburton Group Canada Inc. Non-registered Retirement Savings Plan for the period of time specified in this Agreement, subject to the terms and conditions provided in said Plans and in Articles V and VIII of this Agreement. Except as otherwise provided in this Section 2.2(a) or unless the prior written consent of Halliburton is obtained, KBR shall not participate in any Halliburton Plans. To the extent contemplated by this Agreement, Halliburton may also provide benefits to KBR Employees under the terms of the Halliburton Company 1993 Stock and Incentive Plan, the Dresser Industries Inc. Deferred Compensation Plan, the ERISA Excess Benefit Plan for Dresser Industries Inc., the ERISA Compensation Limit Benefit Plan for Dresser Industries Inc., the Halliburton Group Canada Inc. Profit Sharing Pension Plan, the Halliburton Management Performance Pay Plan and the Halliburton Annual Performance Pay Plan. As of the Deconsolidation Date, unless the prior written consent of Halliburton is obtained, KBR shall not participate in any Halliburton Plans.

(b) Halliburton’s General Obligations as Plan Sponsor . Halliburton shall continue to administer, or cause to be administered, in accordance with their terms and applicable law, the Halliburton Plans specifically identified in Section 2.2(a), and shall have the sole and absolute discretion and authority to interpret said Halliburton Plans, as set forth therein, subject to the specific arrangements provided in this Agreement.

(c) KBR’s General Obligations as Participating Company . With respect to any Halliburton Plan or program that provides benefits to a KBR Employee, KBR will cooperate with Halliburton on a timely basis with respect to such Plans or programs, and KBR shall comply with the terms as set forth in such Plans or any procedures adopted pursuant thereto, including (without limitation): (i) assisting in the administration of claims, to the extent requested by the claims administrator of said Halliburton Plan; (ii) cooperating fully with Halliburton Plan auditors; (iii) the provision of payroll processing support; (iv) the qualification and administration of QDROs; (v) preserving the confidentiality of all financial arrangements Halliburton has or may have with any entity or individual with whom Halliburton has entered into an agreement relating to said Halliburton Plan; and (vi) preserving the confidentiality of participant information to the extent not specified otherwise in this Agreement. In addition, KBR shall provide, or cause to be provided, all participant information that is necessary or appropriate for the efficient and accurate administration of each Halliburton Plan or program that provides benefits to a KBR Employee during the respective period applicable to such Plan. Halliburton and its respective authorized agents shall, subject to applicable laws of confidentiality and data protection, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the other party or its agents, to the extent necessary or appropriate for the administration of said Plans or programs.

(d) Reporting and Disclosing Communications to Participants . While KBR is a Participating Company in the Halliburton Plans, Halliburton shall take, or cause to be taken, all actions necessary or appropriate to facilitate the distribution of all Halliburton Plan-related communications and materials to participating KBR Employees and their

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beneficiaries, including (without limitation) notices and enrollment material for the Halliburton Plan. KBR shall provide all information needed by Halliburton to facilitate such Halliburton Plan-related communications. KBR shall take, or cause to be taken, all actions necessary or appropriate to facilitate the distribution of all KBR Plan-related communications and materials to participating KBR Employees and their beneficiaries.

(e) Halliburton Under No Obligation to Maintain Plans . Except as specified otherwise in this Agreement, nothing in this Agreement shall preclude Halliburton, at any time, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any Halliburton Plan, any benefit under any Halliburton Plan or any trust, insurance policy or funding vehicle related to any Halliburton Plan (to the extent permitted by law) in accordance with the applicable governing plan documents.

ARTICLE III

DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS

SECTION 3.1 Halliburton’s Obligations for Domestic Plans .

(a) Generally . Halliburton hereby affirmatively covenants that, to the extent permitted by law, the Halliburton Qualified Plans shall provide that, effective as of the date on which KBR is no longer a member of the “controlled group” of corporations of Halliburton (as defined in Section 414(b) of the Code), a participant in said Plans who is employed in the KBR Business shall be deemed to have terminated his or her employment under said Plans and, if otherwise eligible under said Plans, shall be eligible to receive a distribution of benefits in accordance with the terms and conditions of said Plans. In addition, Halliburton hereby affirmatively covenants that the Halliburton Qualified Plans shall provide that, effecti