An employment contract is an agreement between an employer and an employee. Although employment agreements are not utilized in every hiring and employment scenario, they help to clarify the terms of employment. Additionally, employment agreements are beneficial because they can assist in any disputes that may arise over the course of the relationship.
Once an employment contract has been signed, it is binding for both parties involved. Therefore, if either party violates the terms of the employment contract after it has been executed, they could be held legally liable for their actions.
A written employment contract generally includes the following information:
- Wages, salary, and benefits;
- Termination procedures;
- The duties and responsibilities of both parties;
- Job title;
- Time frame;
- Vacation and sick leave;
- Confidentiality clauses;
- Dispute resolution procedures; and
- Severance details.
As long as the terms of the contract are not fraudulent, illegal, or against public policy, both the employer and employee may add any provisions they want. Further, the agreement may not be signed as a result of duress, coercion, misrepresentation, or undue influence.
When an employment contract is not utilized, the employment is generally considered to be at-will. At-will employment means that an employer may terminate an employee at any time, for any reason, or no reason at all, so long as the reason is not illegal. However, at-will employment situations may also involve some sort of negotiation regarding the terms of employment.
The main advantage to having an employment contract is the level of detail. Both parties are able to describe the employment is great detail, which enables the negotiation process and encourages negotiations until the best compromise is found. Additionally, the contract can serve as written evidence during a dispute, if needed.
In general, most state laws do not require employers to engage in employment contract negotiations. However, if negotiations do occur, some of the most commonly discussed topics are:
- Wages and benefits;
- Work hours;
- Various clauses, such as non-compete clauses or non-disclosure clauses; and
- Length of the employment arrangement.
These topics are fairly basic terms of employment. As such, both parties may wish to address more specific items when negotiating an employment contract. Some examples may include:
- Work Location: You may want to question the other party about possible alternative locations, or whether your job will involve any traveling. In the same vein, you may want to ask about future required relocation and whether related expenses would be covered by your employer. Relocation expenses that could be covered include moving expenses, temporary housing, transportation costs such as the shipping of property, storage fees, and real estate agent fees, to name a few;
- Fringe Benefits: Another topic to discuss is whether any fringe benefits are available to you, such as daycare resources, gym memberships, free parking, etc. Sometimes these benefits are available, but only upon request;
- Advancement Opportunities: If you are accepting a job offer based on future potential to advance within the same company, it is important that you make that known during negotiations. This will help provide clarity if you are unsure of any such opportunities; and
- Company Goals, Policies, and Vision: You may find it important that your employer’s goals, policies, and visions match up with yours. During negotiations, you may want to view the company’s vision plan or mission statement in order to make an informed decision.
Negotiating an employment contract is a good time to bring up any concerns or issues you may have. Many employers will be willing to negotiate terms that may not be part of a standard employment agreement.
One of the main purposes of an employment contract is to provide a written record of the agreements both parties reached during negotiations. Additionally, employment contracts should also provide a dispute resolution protocol. As such, it is in your best interest to keep a copy of your employment contract for future reference. Keeping a copy of your employment contract allows you to refer back to the original agreement and protocol, should you have any questions or disputes.
Disputes over terms of employment are often resolved within the company. An example of this would be submitting a complaint to the company’s human resources department. If the company’s internal resolution process does not resolve the issue, you may find it necessary to file a complaint with a government agency such as the Equal Employment Opportunity Commission (“EEOC”). The employment contract itself could serve as evidence in support of your claim during a lawsuit, if necessary.
Most commonly, however, disputes arise due to the future employee being unaware of their employment rights under state and local laws. Because of this, it is important to educate yourself before going into negotiations.
A skilled and knowledgeable employment law attorney can help you fully understand your rights under state and local employment laws. Additionally, an experienced employment law attorney can also review any employment contracts. Finally, an employment law attorney can also represent you in a civil suit, if necessary.