Employment contracts are essential documents that provide clarity and structure to the employment relationship between an employer and an employee. The purpose of an employment contract is to clearly define the terms and conditions of employment, so that everyone – employer and employee alike – knows exactly what is expected of them.
The contract typically covers a range of issues, such as the duration of employment, job duties, compensation, benefits, termination details, and other relevant employment terms. Employment contracts provide numerous benefits to both the employer and employee.
For employers, they limit the scope for disputes or misunderstandings. An employment contract ensures that both parties are aware of their obligations and expectations, which can reduce the likelihood of legal disputes.
For employees, employment contracts provide peace of mind and job security. A well-drafted employment contract can make it clear what is expected of them and what they can expect in return.
The following components should be included in an employment contract.
The employment contract should include the employee’s name, job title, starting date, and other basic information, such as contact information.
The employment contract should clearly define the employee’s duties and responsibilities. This can include details about tasks, targets, and goals expected from the employee.
Employment contracts should address compensation, including salary, benefits, and other forms of compensation, such as bonuses or stock options. The contract should detail how and when the employee will be paid and what benefits will be included, such as vacation time or insurance policies.
The contract should outline the circumstances in which employment can be terminated, such as resignation, retirement, or dismissal. An employment agreement should specify what the process is for resolving disputes, including mediation, arbitration, or litigation.
An “at-will” clause is a provision in an employment contract that indicates that either the employer or the employee can terminate the employment relationship at any time and for any reason, without any legal consequences, provided there is no illegal discrimination or contract violation. The at-will status clearly outlines the terms of the employment relationship so that employers and employees alike understand their relationship and corresponding expectations.
The at-will status gives both parties the freedom to end the employment relationship at any time for any reason. However, it is important to note that having an at-will clause does not exempt employers from being held liable for wrongful termination under certain circumstances. Wrongful termination can occur if the employer violates federal, state, or local anti-discrimination laws, or violates any provision of an employment contract.
Apart from employee details, job duties, compensation, benefits, and termination details, there are other provisions that may be included in an employment contract, depending on the employer’s requirements and the nature of the job:
- Confidentiality and non-disclosure: The employer may include clauses that prohibit employees from sharing confidential or proprietary information. This clause is especially important for companies that deal with trade secrets, client lists, or other sensitive information.
- Non-compete and non-solicitation: Employers may include clauses that restrict employees from competing or soliciting business from clients for a certain period after their employment is terminated. Be aware that several states have begun invalidating non-compete clauses.
- Intellectual property: If an employee is expected to create intellectual property during their employment, the contract may specify who owns it and how it can be used.
- Performance expectations: Employers may set performance expectations and provide consequences if employees do not meet them.
- Work schedule and hours: The employment contract can specify the work schedule and hours of the employee based on the employer’s requirements.
- Benefits: Employers may specify the benefits offered to their employees, such as vacation days, sick days, health insurance, and retirement benefits.
- Entire agreement: Employers may include clauses that specify that the employment agreement contains the entire agreement between both parties and supersedes any prior agreements, verbal or written.
Philadelphia Business Lawyers at Sidkoff, Pincus & Green P.C. Can Help Keep Your Business Compliant
To stay compliant, it is important to have effective employment contracts. Protect yourself and your business by speaking with our Philadelphia business lawyers at Sidkoff, Pincus & Green P.C. Call us at 215-574-0600 or contact us online to schedule an initial consultation. Located in Philadelphia, we proudly serve clients in Pennsylvania and New Jersey.