An employee agreement is the traditional document used in relationships between employees and employers for the purpose of laying out the rights, responsibilities, and obligations of both parties during the employment period. Given its purpose, an employee agreement can be one of those vital documents utilized by an employer. The employee agreement will allow an employer to solidify the relationship with employees to make certain that the key terms of the contractual relationship are understood by each party. Examples of these key terms are:
3) Work schedule
4) Vacation allotment
5) Restriction on confidential information
Employer benefits that are generally offered and included in an employment agreement include health insurance and 401K matching in addition to non-traditional offerings, such as vacation based on hitting performance goals.
An employee agreement will typically be reduced to a traditionally written agreement that will require the employer and employee to acknowledge and sign. That said, employers do not have to reduce every employee agreement to a written contract. In fact, more frequently than being reduced to writing, employee agreements can be implied via verbal statements or additional actions taken by either the employer or the employee. These implied agreements can take the form of company authorized memoranda, company policy and procedure, or employee handbook material.
While most employment in the U.S. is at-will, employers may utilize employment contracts as a way to ensure that their most qualified talent is bound by the terms of a contract, which will be a deterrent to employees leaving the company and an advantage to the contract.
Employment contracts can also incentivize highly skilled employees to join your company. The prospect of having a contract can ensure greater stability for the highly skilled employee. These employees may have other job offers, and a contract with appealing turns could lure top talent to your company. Lastly, the presence of an employment agreement will provide the employer with greater control over the work being done by the employee subjected to the contract provisions.
Unlike an at-will employment relationship, the presence of a contract will preclude an employer from simply terminating an employee if the employer experiences a downturn in business or the employee does not meet the employers original expectations. Unfortunately, in either of these cases, the employer will be left to likely renegotiate the employment contract with the employee.
Under the legal provisions of the contract, an employer is obligated to act under a covenant of good faith and deal fairly with the employees as they enforce the original terms and conditions of the contract. This provision is an important protection for employees as it serves as a deterrent to prevent an employer from breaching the contract as acting in bad faith could ultimately lead to more extensive legal damages under the law.