An employment contract between an employee and employer can be beneficial for both sides. An employment contract can make it so there are fixed terms in the agreement where both sides have a clear understanding of the employment relationship and allows predictability and understanding for both sides. Contracts are in many ways like insurance agreements where it is more foreseeable on what will occur in the event of a future unforeseeable event. Attorneys are in many ways like wizards that write terms in contracts to help mitigate all worst-case scenarios.
Sometimes individuals and companies enter into contracts and it is still not clear if the individual is an independent contractor or employee under the terms of the agreement or an exempt employee or non-exempt attorney for overtime pay purposes. An attorney may have to analyze the relationship between the parties to properly make that determination.
An employment contract between employee and employer can help protect the company if issues arise out of the employment relationship down the road and which they can enforce. It can also help protect the employee and the employee rights which they can enforce down the road.
A good employment contract should be tailored to the specific relationship to the employee and the employer. If there is a one size fits all contract that a company uses for all of its employees, there may be some terms that may not be applicable or enforceable.
Employment contracts are also beneficial as it can give your employees some sense of security for their positions. It also gives them acknowledgment if this is some kind of promotion. Employees that feel secure and acknowledged at work will most-likely perform better.
An employment contract can define the terms of salary of pay and other benefits and bonuses, the expectations of the employee and what can constitute termination. In Utah, an employer can still define a contract to where it is clear that the employee-employer relationship is still at-will without losing that at-will status if an employer still wants the flexibility to terminate an employee at anytime for any reason.
The negative to leaving the at-will status for an employee out there is that it again loses an employees sense of security and acknowledgment with fear that they could get terminated for just sneezing. If there are clear defined roles instead of what could lead to a termination, employees can feel more secure and less stressed about their job security.
It also makes it so company decisions are made more rationally and logically instead of based off business-drama and personal biases. This can help companies avoid legal liability for the decision to terminate an individual without an identifiable basis down the road. It will also create consistency across the company.
An employment contract can also outline what the parties will do if there is a legal issue that arises between the parties. The parties can agree to a dispute resolution process that is more cost-effective for both sides to resolve which can be beneficial for both parties.
If the contract is for a definite term, say two years, that could allow an employee’s status to rise above the at-will status. Again, it is good to talk to an employment attorney about the pros and cons to this. However, an employment contract can still be written where it is clear that the employee is still at-will.
If there is no contract between employee and the employer, there is still an implied contract if there is a employee / employer relationship. However, the terms may not be clearly defined. The problem with not having a contract is that if a company makes a promise as to terms and the terms are arbitrary or if a person is not paid under those terms, an employee may have a valid cause of action for those implied terms. It is best to have all terms in writing so there is no confusion down the road for both sides.
A Utah Employment attorney can also advise on whether or not it would be legal and wise to implement a non-compete agreement or any other restrictive covenant. Only specific employees qualify that allow employees to have them enter such covenants.
It is also important for any employee to have an attorney review their employment contract before signing as the contract will most-likely be drafted more favorable to your employers interests than your own that may cause issues for you down the road.
Contact our firm today for more information on employment contracts.