An employment agreement is a prerequisite for almost every job or occupation. Typically, an employment agreement comprises a written form or legal document outlining the compensation entitlement of the employee, and the rights and duties of both employer and employee. Despite the obvious need for a written employment agreement, there are still many companies that rely on oral commitments and good faith while dealing with various employer-employee issues.
Such a lackadaisical approach leads to multiple employment agreement disputes. The Bureau of Labor acts as a watchdog in all such disputes and is empowered to sanction the organizations that do not follow the US employment laws in this regard. However, generally, disputes involving employment agreements do not warrant the involvement of the government or any governmental agency. A civil suit is a usual recourse for all disputes relating to the employment agreement.
Components of Employment Agreement
To avoid the potential disputes among employers and employees, it is important to review the employment agreement and make sure that it addresses the following essentials:
- The duties of employees in the workplace should be specified and appropriately defined.
- Duration of employment and termination conditions should be specified in clear terms. If the employment is at will, the agreement should mention it.
- The rights of the employer must be specifically provided in the agreement to avoid any confusion in case of an employment dispute.
- The compensation entitlement of the employee should be laid out along with the associated perquisites, allowances, bonuses, incentives, employee welfare schemes, insurance benefits, etc.
- The tax obligations of the employer and employee should be mentioned so that the respective parties know their liabilities.
- Standard non-disclosure and non-compete clauses are indispensable for any employment agreement.
- Any other restrictive clause that the employer wants should also be mentioned within the employment agreement.
Before signing on the dotted line, the employee must carefully review the employment agreement, and in case any clause is found to be unreasonable or unacceptable, it should be negotiated with the employer.
Termination of Employment Agreement
The employment agreement must provide for conditions and effects of termination of the agreement by either party. The respective parties must be aware of their rights and duties at the time of termination of the employment agreement. The financial rights and obligations can be a sticking point among the employer and employee, particularly involving the issues like earned and unused vacation time, unpaid commissions, bonuses, etc. Moreover, intellectual property rights during and after the termination of the employment agreement should be specified to avoid disputes at a later stage.
The employee must be aware of the grounds for termination of his employment. This is particularly important when the employer is running into losses and looking to prune their staff. In such a scenario, unreasonable grounds may be cited to terminate the employment.
The services of an employment law attorney are indispensable to review, assess, and evaluate the employment agreement so that it must be ensured that the agreement is consistent with law, and not unreasonably harsh on either party.