A contract may be formed when an employer promises certain compensation in exchange for a specific type of labor. Employment contracts may be in writing or verbal, or some combination of the two. E-mails may, for example, form part of employment agreements.
Employment contracts may also be implied through the conduct of the parties. To limit their liability for such agreements, employers will frequently include clauses in “offer letters” that say that any prior terms are superseded by the written agreement, and/or that employment is “at-will.”
The offer letters or other agreements will often state that the terms of the agreement can be modified only in writing. If you are given such a letter to sign, you should contact an attorney immediately. Though you may regard it as a simple formality (with the real intent being your months of prior conversations and e-mails), a disreputable employer may seek to use such agreements to renege on promises made.
Written employment contracts typically set forth the terms and obligations of the employer’s relationship with the employee. Typically, only high level executives or managers are given such agreements for negotiation.
These written employment contracts are negotiable prior to acceptance of a position. After signing the employment contract, the employee and employer are both bound under the terms of the contract, with future revisions often required to be only in writing.
The employment contract often gives the employer control over how and when they can terminate an executive. On the flip side, an employment contract can provide the employee with a sense of job security, if it includes a “for cause” provision, or other provisions on severance and separation.
Even if a written contract does not include a “for cause” provision for termination, if it covers in detail when and how commissions or bonuses are paid, then it may be very helpful to the executive or manager who signs it.
Basic terms in a written contract will often include the following, though each contract is different and key terms will vary depending upon the industry, position and individual involved:
You should consult an attorney before signing or drafting an employment contract to ensure that you know what to expect under the contract. An attorney can also help negotiate terms that will benefit you and to re-negotiate the contract if either party wishes to change the employment relationship.
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