Well, let me provide you with the following general information about
Written employment agreements, especially for the executives or key
personnel of a business, have become relatively common in all forms of
businesses. Employment agreements provide benefits to both the
employee and the employer. An employment agreement gives the employee
more security with regard to the duration of the employment and the
terms and conditions of the employment. From the employer's viewpoint,
the agreement outlines the services expected from the employee for a
period of years and allows the company to evaluate its liability in
the event that it terminates the agreement during its term. In a
small, closely held corporation or partnership whose ''owners'' are
also employees, employment agreements help to substantiate the payment
of business earnings to the owners as salaries, avoiding treatment of
the payments as dividends for tax purposes. Written employment
agreements also help to prevent disagreements among the owners.
Employments agreements often contain promises prohibiting disclosure
or use of business secrets. They may contain provisions establishing
the employer's property rights in the employee's inventions. An
employment agreement can also be useful in imposing obligations that
concern conduct after the employees employment has been terminated,
particularly the obligation to not compete with the business after
termination of employment.
For a contract of any type to be enforceable, the parties must reach
mutual agreement, exchange consideration, and outline the terms of
their agreement with sufficient clarity. Thus, an enforceable contract
should contain mutual promises to employ and to provide services,
laying out the duties to be performed by the employee and the
compensation to be paid by the employer in return for the employee's
performance of his/her job. In addition to the terms pertaining to the
employee's duties and rate of compensation, provisions covering the
duration of employment and the reasons for, and manner of, termination
of employment should be included. It is to the advantage of both
parties to set forth the terms of their agreement as specifically and
comprehensively as possible in order to avoid future disputes.
In general, a written contract is not required to establish an
employer-employee relationship. In fact, in many instances, an
employment contract consists of no more than a simple oral agreement
regarding the employee's duties, hours, and rate of pay, with no
provision for the duration of the employment. In such situations, the
employment is terminable, at will, by either party. Written employment
contracts are customarily used with certain types of personnel, such
as key managerial and professional employees; sales personnel with
assigned territories; teachers, principals, and superintendents
employed by school districts; professional athletes, coaches, and
managers; research and development personnel engaged in the design and
development of confidential or proprietary information; and personnel
employed for specified periods or to perform specific assignments.
If the term of the employment agreement is more than one year, the
agreement must be in writing in order for it to be enforceable.
Long-term agreements benefit both parties. The employer is assured of
having the services of a skilled or valuable employee for a certain
period of time, and the employee obtains a greater degree of job
security for that period of time.
If an employer's agreements with its employees are oral, caution
should be taken to ensure that any employee handbooks or policy and
procedure manuals that are provided by the employer are not construed
as part of the oral employment agreement. Courts are generally
reluctant to construe material given to an employee as an implied
contract, but the possibility exists under appropriate circumstances.
This issue arises most frequently in the context of employee
The following is a sample Employment Contract which contains the
AGREEMENT made on_________________ [date ], between_________________
[name of employer ] (Employer), having a principal place of business
at_________________ [address ], and_________________ [name of employee
] (Employee),_________________ [address ]. In consideration of the
mutual covenants and agreements set forth below, the parties agree as
1. Employee is employed as_________________ [position ] and shall work
at_________________ [e.g., the address of Employer's principal place
of business] and at other places as directed by Employer, for the term
of_________________ [state period of employment ], commencing
on_________________ [date ] and terminating on_________________ [date
]. Employee shall_________________ [set forth duties ].
2. Employee shall work_________________ [number ] hours during the
periods to be designated by Employer during five days each week for a
total of_________________ [number ] hours per week. Employee shall
devote_________________ [his or her] entire time and attention to the
business of Employer for the term of this contract. Employee shall not
directly or indirectly render any services of a business or commercial
nature to any other person or organization without the prior written
consent of Employer.
3. As compensation for services rendered under this contract, Employee
shall be entitled to receive from Employer a salary of $
_________________ per year, payable in equal_________________ [specify
time period, e.g., weekly or semimonthly] installments of $
_________________ [specify amount ] on_________________ [specify
payment date or dates ].
4. Employee shall be entitled to a_________________ [specify length,
e.g., two-week] vacation with full pay if_________________ [he or she]
is employed by Employer at the start of the vacation period as defined
in this paragraph. The vacation period, the only period within which
vacations may be taken, shall be_________________ [specify dates,
e.g., between June 1 and September 15], and Employer may elect to
stagger the vacations of various employees during that period.
Employer reserves the ultimate right to determine Employee's vacation
5. Employee shall be entitled to a holiday on each of the following
days with full pay:_________________ [specify holidays ].
6. Employee, on completion of_________________ [specify time, e.g.,
three months] in the service of Employer, shall be entitled
to_________________ [e.g., six] days per year as sick leave with full
pay. Sick leave may be accumulated up to a total of_________________
[number ] days.
7. If Employee becomes disabled during the employment term because of
sickness, physical or mental disability, or any other reason, so
that_________________ [he or she] is unable to
perform_________________ [his or her] duties under this contract,
Employer agrees to_________________ [state method of compensation ]
during the disability but not beyond the date specified in this
contract for the end of the employment term.
8. Employee agrees that_________________ [he or she] will furnish all
information and take any other steps necessary to enable Employer to
obtain a surety bond conditioned on the rendering of a true account by
Employee of all moneys, goods, or other property that may come into
the custody, charge, or possession of Employee during the term of
employment. The surety company issuing the bond and the amount must be
acceptable to Employer in Employer's sole discretion. All premiums on
the bond are to be paid by Employer. Failure by Employee to qualify
for the bond within_________________ [number ] days from the date of
this contract will result in immediate termination of this employment
9. This contract may be terminated by the_________________ [Employer
or Employee] by giving_________________ [number ] days' written notice
of termination to the_________________ [Employee or Employer].
Termination shall not prejudice any remedy that the terminating party
may have at law or in equity.
10. If this contract is terminated prior to completion of the term of
employment specified in this contract, Employee shall be entitled to
compensation earned prior to the date of termination as provided for
in this contract computed pro rata up to and including that date. Em-
ployee shall be entitled to no further compensation as of the date of
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