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Employment Agreement Introduction

An employment agreement is a prerequisite for almost every job or occupation. Typically, an employment agreement comprises of a written form or legal document outlining the compensation entitlement of the employee, 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 lackadaisical approach leads to multiple employment agreement disputes. 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 agreement do not warrant the involvement of government or any governmental agency. A civil suit is the usual recourse for all disputes relating to employment agreement.

Components of Employment Agreement

In order 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:

  1. Duties of employee in the workplace should be clearly specified and appropriately defined.
  2. Duration of employment and termination conditions should be specified in clear terms. If the employment is at-will, the agreement should clearly mention it.
  3. Rights of employer must be specifically provided in the agreement in order to avoid any confusion in case of an employment dispute.
  4. Compensation entitlement of the employee should be clearly laid out along with the associated perquisites, allowances, bonuses, incentives, employee welfare schemes, insurance benefits, etc.
  5. The tax obligations of the employer and employee should be mentioned so that the respective parties know their liabilities.
  6. Standard non-disclosure and non-compete clauses are indispensable for any employment agreement.
  7. 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 employment agreement. The financial rights and obligation 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 employment agreement should be clearly specified to avoid disputes at a later stage.

Employee must be aware of the grounds of 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 indispensible in order 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.

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