Creating a Fair and Enforceable Employment Agreement

As a business owner, you put time and money into recruiting and cultivating key employees, and it is reasonable to want to protect your investment. You may not need an employment contract for all staff members, but you should have a written agreement for:

• Key managers and professionals
• Any employee who is privy to confidential information or trade secrets
• An employee who could leave and become a direct competitor

An employment agreement needs to be based on valuable consideration and must be reasonable to be enforceable. 

The enforceable employment agreement is one that takes into consideration the needs of the employer while being fair to the employee. Business lawyers who draft an employment agreement can make sure that: 

• The terms of employment are clear, whether it is an at-will, (can be canceled at any time for any reason), no-cut (good for a set period of time) or evergreen (automatically renews for an additional and specified period of time) agreement.
• Termination clauses address acceptable reasons for termination by the employer and the rights of the employee to terminate the agreement. This clause should address termination compensation and be specific about financial agreements concerning whether termination is for cause or otherwise. It is wise to have a bad-faith penalty clause.
• Job descriptions are accurate. It is important to make sure that the description is neither overly broad nor too narrow. Also, it should include information regarding core responsibilities, whether it is a full-time, part-time or flex-time job, and whether travel is expected.
• Compensation addresses wage or salary or commission, in addition to information about medical insurance and retirement plans. How incentives, such as bonuses, are earned should be explained.

The purpose of a solid employment contract is to protect employers from legal difficulties down the line while ensuring the fair and equal treatment of employees. Consulting a knowledgeable contracts lawyer can benefit both parties.