The employer needs to know the complete address of the employee for a number of reasons. One is for payroll purposes. Setting up an account for a person requires him to provide his address. Another reason is that if something wrong happens, they would know where to locate him or his family. The company also needs an employees address so that they can be certain of his identity. And another reason would be for mailing of anything necessary purposes.
Another benefit is the clear reduction in legal liability that a business can achieve by using a simple employment agreement template. When you have clear requirements for both parties written in a signed document this eliminates a lot of the ambiguity and costs associated with lawyers and courts if you are ever sued by a current or former employee (or worse yet, the employees union). As long as the agreement follows the law and the employee was competent at the time of signing, most courts will honor its terms. This can get you out of a very expensive situation!