Employment Contracts & Severance Contracts - Tressler & Associates, PLLC
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Employment Contracts & Severance Contracts

Before you can bring on new employees, they need to know the basic requirements of their employment. If you need to let them go, you need to have exit forms to sign. Everyone involved should have a clear understanding of what is expected of them. Employment contracts should detail everything an employee and employer need to know about the employee’s new position. Severance agreements detail the process for when someone is let go.

To make sure that your contracts and agreements cover everything they should and are as welcoming as possible to new employees, contact the corporate law attorneys at Tressler & Associates. We’ll work to make sure everything is written to protect your business.

What is an Employment Contract?

An employment contract specifically details the obligations and the working relationship between the employer and the employee. This is one way an employee can learn what they are obligated and expected to do during their time with the company. Employment contracts also serve as proof that the employer and employee understand what is required of them. Employers and employees are both protected and held accountable for their responsibilities by signing one.

What Should Be In an Employment Contract?

Employment contracts need to contain the employer’s and employee’s responsibilities and what each one will receive by doing so. This includes:

  • Work Schedules: What are the days and hours that the employee will work? This should include on-call hours when they need to be available.
  • Duration of Employment: If the position is temporary, the allotted time they have to work and be available needs to be in the employment contract. If you want the possibility to extend their employment, the contract should say when this extension could happen.
  • Salary/Wages/Commission: The contract should explain how the employee will be paid. This includes the yearly salary, an hourly rate, and/or commission. Even if you live in a state with pre-set overtime rates, your employment contract re-affirms it if you have overtime.
  • Benefits: If any benefits come with employment, the employment contract should say so. This can include health insurance, 401k, vacation time, dental insurance, and more.
  • Confidentiality: While employers should also have new employees sign non-disclosure and confidentiality agreements, it’s always safe to have multiple signatures on the subject. 
  • Communication: Depending on the employee’s role, they may need to be available to communicate at all times. They may need to be on-call, but this can also include being available to respond by email. 
  • Social Media: There may be limitations on what an employee can post on social media, especially if they are running the company accounts. 
  • Non-Competes: You don’t want employees quitting and going to work with your competitors, so non-compete agreements are important. They can be a part of an employment contract.
  • General Responsibilities: List the various duties and responsibilities the employee has to complete regularly.

Types Of Employment Contracts

There are three types of employment contracts. These are separated by how they are written or created. Written employment contracts are the safest, the most set in stone, and don’t include a third party. Your business controls what does and doesn’t need to go into an employment contract with those of the written type.

  • Written Employment Contracts: This type of contract is written carefully by lawyers and confirmed with signatures. It also gives the employee the chance to carefully read and understand their employer’s requirements before signing.
  • Implied Employment Contracts: This one is inferred from comments made during the interview or job promotion, or something said in the employee manual or handbook. These statements can be used as an employment contract if no other contract is made. They are open to scrutiny and misinterpretation.
  • Union Labor Agreements: These are written contracts, but ones written by the labor union. Labor unions will make a point to address the grievances of workers with their contracts. This can include stipulating wages, benefits, scheduling issues, and working conditions. If labor unions need partners to create strong written contracts, our corporate law attorneys can help.

What is a Severance Agreement?

Severance agreements dictate the procedure for when an employee is let go. Severance agreements can be signed alongside the employment contract or as a part of it, but it’s more common to have someone sign one as they are released from employment. Having the severance agreement doesn’t make a lot of sense for employment that’s not temporary by design. It can establish a poor work ethic or a hostile working environment.

What Should Be In Severance Agreements?

Severance agreements can be far more flexible than most contracts without leaving a business open for scrutiny. While it is expected that companies compensate their employees, it’s not always required based on how long an employee works, how they were paid, and what kind of work they do. But it should still include details about:

  • Compensation: Saying that you will or will not compensate the terminated employee is important. Even saying you won’t is safer than saying nothing. The terminated employee should know your intentions.
  • Confidentiality: While the employee may have already signed several confidentiality agreements, another may be needed after they’ve completed their employment to protect anything that wouldn’t fall under previous agreements. This is also to keep the reason(s) for their termination confidential.
  • Official Date of Termination: Even if the employee is officially being terminated the day they sign this agreement, having a date dictates what you still have to pay them, especially if they’re paid by wages.
  • Benefits: If you offer benefits to terminated employees, how long they will receive them and which ones should be specified.
  • Indemnification Rules: If you want to place requirements for a terminated employee to receive money and benefits, they must be in the severance agreement. This can be how you keep someone from talking about confidential information a confidentiality agreement can’t legally cover. 

Contact Tressler & Associates for Your Employment Contracts and Severance Agreements

Having weak or vulnerable employment contracts and severance agreements puts your business at serious risk. Every business eventually has to let employees go, so prepare yourself so you can protect your business as much as possible.

The corporate law attorneys at Tressler & Associates have the experience and ability to help you write, review, and finalize employment contracts and severance agreements for your business. Contact us today.

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