Employment Agreements—The Pros and Cons

When Is It Better to Have Your Employees Under Contract?

There’s no requirement, at any level or for any job, that the parties enter into a binding employment agreement. A well-constructed agreement can offer benefits but also will place some restrictions on the rights of both parties.

Advantages and Disadvantages for Employers

One of the primary advantages for employers has little to do with the language of the document and more to do with its mere existence. The employment law of most states considers employment to be at will. At-will employment means that either party may terminate the agreement at any time for any reason, provided the reason is not contrary to law or public policy or in violation of a valid employment agreement.

When you’re looking to hire key people, you may have more success finding and retaining the best talent if the candidates know they will be protected by an employment contract. Of course, that can also be a disadvantage, as you will be able to fire the employee only according to the terms of the agreement.

A written contract also ensures that all benefits and incentives are documented, making it easier to resolve disputes over bonuses, payment, leave, and other matters. A written agreement typically includes a covenant not to compete and a confidentiality clause, maximizing the protection of your business interests. You also can designate whether inventions or other creative output from the employee during the term of employment belongs to the company or the employee.

Advantages and Disadvantages for the Employee

A written employment agreement assures an employee that they won’t be terminated without cause, and it can address the particulars of any allowable disciplinary measures. Such contract provisions can protect a worker from wrongful treatment that might result from personality conflicts or other non-performance-related issues.

Because an employment agreement typically contains non-compete and confidentiality provisions, as well as clauses regulating inventions, copyrights, and trade secrets, an employee who enters an employment agreement typically has less freedom to work for other companies when they terminate employment.

Contact MCIS Law

At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to startup and existing businesses in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.