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By Sanjeev Kumar
Founding Attorney

Having a written employment contract actually tends to be the exception rather than the rule. Without a written contract, the employee is considered to be “at-will.” When an employee is “at-will,” he or she may be terminated at any time for any legal reason. Many employers and employees may prefer this arrangement because of the flexibility it offers. There are, however, certain benefits to written employment contracts that should also be considered.

The Benefits of a Written Employment Contract

An employment contract can cover a wide range of issues. It can clearly set forth employment expectations for both the employer and the employee by describing in detail what the employee’s job duties are and what the employer will pay and provide them in return, such as salary and benefits. Benefits may include health insurance, sick leave, vacation leave, and disability leave. An employment contract may also detail the duration of the job as well as setting forth the grounds for termination.

In some cases, an employer may use an employment contract to limit an employee’s ability to compete with the business should the employee leave the company. There can also be built in trade secret protections in an employment contract as well as claiming ownership of the employee’s work product. Furthermore, the employment contract can establish the requisite dispute resolution means should disputes associated with employment arise.

Because of all that can be established by a written employment contract, one should be seriously considered. For business owners, having a written business contract can be a good option should finding or training a replacement for an employee be costly or take a serious time investment. An employee contract can do things like help ensure an employee stays with the company for a set amount of time. Alternatively, the contract can require an employee to provide you with enough notice that he or she is leaving the company so that you have enough time to both find and train a replacement. Should an employee violate the terms of the contract, there can be penalties associated with doing so.

Additionally, a written employment contract may be a good idea should an employee be privy to confidential or sensitive information about the business and its operations. A confidentiality clause in an employment contract can prohibit an employee from disclosing sensitive information or using the sensitive information for personal gain, such as using the information for purposes of competing with the employer’s company after the employee leaves his or her job position.

A written employment contract can also work to the advantage of employees as well. Both the job security as well as favorable terms that can be offered with a written employment contract can help bring skilled workers to a company. It can also help retain skilled employees.

Business Law Attorney

Are you considering a written employment agreement for your employees? If so, talk to the trusted business counsel at The Kumar Law Firm. We can draft these agreements to help ensure that your business is properly protected. Contact us today.

About the Author
Sanjeev Kumar is the founder and principal at the Kumar Law Firm, which provides a wide range of legal services to entrepreneurs and business owners in the area of business & corporate law and intellectual property along with related areas of interest to clients such as business succession planning, wealth preservation through estate planning, and alternate dispute resolution.