Articles

What Are The Benefits Of Having An Employment Contract?

A written employment hiring contract may be the employee's most powerful vehicle for altering the normally rather one-sided relationship with their employer. Without such an employment hiring agreement, in many cases the employment will be "at will," which means that the employee may be discharged at any time and for any reason and that key employment terms such as salary, bonus, benefits, title, duties and status can be changed at the employer's discretion.

A formal hiring contract should be given serious consideration by any executive or key employee where the company places significant value on obtaining the employee's services, and if desired, should be raised and negotiated before an employment offer is accepted when you have maximum bargaining leverage. But formal multi-page hiring agreements are not the only form of contracts upheld by the courts. An exchange of letters between the employer and employee may be enough to create contractual rights. Moreover, even with no individual written promises between you and your employer, general policy statements in employee handbooks or personnel manuals may create contracts, entitling employees to protections, such as the requirement of good cause or progressive discipline before employment termination.

Just as a written hiring agreement can provide for significant benefits and protections during employment, at the end of employment, a severance or separation agreement can have great advantages for the employee. A few of the advantages that an employee may secure with a properly drawn severance agreement are continued salary or settlement payments; bonus and commission eligibility; the extension of stock options or stock rights, the enhanced funding of retirement benefits or so-called "bridges" to early retirement, as well as continuing employee benefits, such as health, life, and disability insurance, outplacement services, a positive letter of reference, and other favorable provisions.

If you would like further information about employment contracts, please contact us by e-mail or call us at 612.339.4295.

Click here to go to Employment Law.