Employment Contracts
Contrary to popular belief, every employee has an "employment contract"; but most of them are oral, and therefore difficult to discern what its provisions are. They can even evolve inadvertently from want-ads promising "career" opportunities, or "welcome aboard" letters sent to the new employee implying a fixed term of years as "guaranteed" job security. An employer must be extremely careful in all such communications not to imply a "no-cut" contract of some sort and end up with an employment agreement containing no reasonable way to terminate the employee.
Written employment contracts for key employees are crucial; and if your company doesn't have them in place now, you ought to start immediately. Unless a particularly key employee justifies granting him or her some long-term employment security protections, the contract should say that it constitutes employment "at-will" and can be terminated by either side at any time for any reason or for no reason at all.
They are a great place to embed a non-compete (see separate Client Services tab) in order to protect the value of your company; but must be done carefully, and unless signed prior to employee starting their first day of work, must be accompanied by timely and legally sufficient "fresh" consideration of one kind or another to the employee for submitting to various restrictions in the contract.
With reasonable consideration paid, even their existing oral agreement can be, as we call it, "amended and re-stated in its entirety" into a new comprehensive written contract.
Termination "for cause" can be very tricky, and the contract should reasonably spell out exactly what type of action or inaction constitutes "cause", and perhaps a dispute resolution structure such as non-binding mediation or in some cases binding arbitration as a means of resolving what can become very sticky issues.
Written employment contracts for key employees are crucial; and if your company doesn't have them in place now, you ought to start immediately. Unless a particularly key employee justifies granting him or her some long-term employment security protections, the contract should say that it constitutes employment "at-will" and can be terminated by either side at any time for any reason or for no reason at all.
They are a great place to embed a non-compete (see separate Client Services tab) in order to protect the value of your company; but must be done carefully, and unless signed prior to employee starting their first day of work, must be accompanied by timely and legally sufficient "fresh" consideration of one kind or another to the employee for submitting to various restrictions in the contract.
With reasonable consideration paid, even their existing oral agreement can be, as we call it, "amended and re-stated in its entirety" into a new comprehensive written contract.
Termination "for cause" can be very tricky, and the contract should reasonably spell out exactly what type of action or inaction constitutes "cause", and perhaps a dispute resolution structure such as non-binding mediation or in some cases binding arbitration as a means of resolving what can become very sticky issues.
Key Employees |
Non-Competes |
Termination |