Common Provisions Included in Employment Contracts
Terms of an Employment Agreement Establish Rights and Responsibilities
Whether you’re an employer or employee, there are advantages to putting the terms of an employment relationship in writing. For example, without an employment agreement, employment in Texas is considered to be “at will,” which means that an employee may terminate the relationship at any time without giving notice or any type of reason (provided the reason is not illegal or contrary to public policy). In addition, a written agreement can provide clarity when a dispute arises between employer and employee. Not every employee needs an employment contract, but it’s generally a good idea for key employees.
Issues Typically Addressed in Employment Agreements
There are no specific requirements regarding the terms of an employment contract, but the following terms are usually included:
- The period of employment—The contract customarily identifies a start date and may include an end date, if the employment is temporary. It’s also fairly common to identify the number of hours the employee is expected to work during a certain time period (day, week or month).
- Compensation—The agreement usually identifies an annual salary or hourly wage and also may state how often the employee will be paid. The contract also should address other forms of compensation, including commissions, bonuses or deferred compensation.
- Benefits—The contract should identify what fringe or additional benefits the employee will receive and specify the terms of eligibility for those benefits. Examples include health insurance, retirement contributions, sick time, vacation and educational benefits.
- Grounds for termination—The agreement typically identifies when one or both parties may terminate the agreement without being in breach of contract.
- Promotions or raises—The contract may specify when the employee will be eligible for a raise or promotion, as well as the conditions for receiving such raise or promotion.
- Non-disclosure and/or covenant not to compete—It’s customary to require key employees to keep certain company information confidential. In addition, an employer may seek to limit the employee’s ability to work for a competitor upon termination of his or her relationship with the company.
Contact MCIS Law
At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to startup and existing businesses in southeast Texas, including advice on employment contracts. 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.