Employment relationships often are not embodied in a written contract between employer and employee. Instead, most employment is of an “at will” nature, terminable by employer or employee on a moment’s notice, with or without cause. Some employment relationships should be embodied in written agreements, however. Where a business has one or more “key employees” – individuals who are central to the operation and the future success of the company – it makes good business sense to document these arrangements in a written employment agreement.
From the standpoint of both employer and employee, an employment agreement with a key individual should address the following important considerations:
- Term (duration) of Employment
- Bonus arrangements (sometimes called incentive compensation)
- Compensation (amount and timing)
- Employee benefits (insurance, vacation, pension and profit sharing, etc.)
- Protection of employer trade secrets
- Termination of employment (cause, without cause, notice etc.)
- Restrictions on post-termination competition and confidentiality
If there is a trend in the courts, it would seem to be in the extension of rights of employees without written agreements. Very often it is the “big guy” versus the “little guy” environment, where the court will bend rules a bit to favor the little guy; however, because such a large percentage of our population works without written contracts, social and commercial implications of altering these principles to fit circumstances can be enormous. The law proceeds cautiously in such circumstances.
We favor the use of written contracts for key employees. Both employer and employee can benefit from a well drafted written employment agreement. Call us if we can assist in this area.
We favor the use of written contracts for key employees. Both employer and employee can benefit from a well drafted written employment agreement. Call us if we can assist in this area.
– Kevin Palmer