Lawyer to Review an Employment Contract | Agreement Elements

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There are two types of contracts – ones you sign yourself and those signed by someone else on your behalf. If you’re hiring another individual, you’ll want to ensure that their contract isn’t full of legal loopholes that could leave you open to liability. This article explains the different types of arrangements and how to review them before signing them.

What is a Written Employment Agreement?

Lawyer to Review an Employment Contract

An employer-employee relationship exists when an employer provides a job or services for compensation. A formal written document is called an “employment agreement.” An employment agreement usually contains provisions about wages, benefits, discipline, termination, and other matters related to the employment relationship.

A typical employment agreement also includes requirements regarding non-competition, confidentiality, and intellectual property rights.

Employment agreements may come from a variety of sources, including:

  • A law firm representing (different positions) both the employer and the employee;
  • A lawyer hired by either party to express their interests in negotiating the agreement; or
  • The employer and employee agree verbally to all terms and conditions of the contract without having a lawyer draft it.

In addition to the terms are outlined in the agreement itself, the parties’ conduct during the employment relationship will often determine whether they intended to enter into a binding contract.

For example, if one party has made substantial changes to the agreed-upon terms, this may indicate that the other party did not intend to be bound by those terms. Likewise, if one party makes significant promises but then fails to perform, this may constitute evidence that they did not intend to bind themself to these obligations.

Who Signs the Agreement?

Lawyer to Review an Employment Contract

When drafting a written employment agreement, it is essential to determine who will sign the deal. Generally speaking, an individual entering into a new employment relationship with another person is more likely to seek legal counsel than an individual whose prior employment relationship ended. However, there are circumstances where individuals may need to act pro see.

For example, if an individual terminates their employment relationship, they may have no choice but to proceed without legal advice because they cannot afford a lawyer.

Similarly, even though an individual may hire an attorney to negotiate a settlement after being terminated from their previous position, sometimes the individual does not wish to retain the attorney to handle any future employment relationships.

Finally, some employers may choose to have employees sign standard forms, which include boilerplate language stating that the employee acknowledges that they are aware that the terms of the agreement are subject to change.

In such cases, the signature line may be left blank.

What should be included in the Agreement?

Lawyer to Review an Employment Contract

There is no single list of mandatory or required terms included in every employment agreement. Many key factors, such as the type of business involved, the size of the company, whether the business is seasonal, the number of employees, the geographic location of the business, the amount of money involved, and whether lawyers represent the employer and employee, will influence what additional terms in the employment agreement.

Nonetheless, some general rules apply. In most jurisdictions, an employment agreement should contain at least the following basic terms:

Basic terms

Compensation: How much will the employer pay the employee? What is the salary structure? Is there a minimum wage? Are overtime rates applicable? Will commissions, bonuses, or anything else compensates the employee beyond the base salary? If so how much

Terms of Employment: Should the employee work full-time or part-time? Must the employee work certain hours each week? May the employee take vacation days off? Can the employee quit before the end of the year? Does the employer require that the employee return unused vacation days?

Term: When will the employment relationship begin? When will it expire? At what point can either party terminate the relationship?

Term Limits on Compensation: Will the compensation continue for a fixed period, or will the employee receive compensation until retirement age?

Term Limits on Term: Will the employment relationship last for a fixed period of months, or will it continue indefinitely?

Perquisites – Will the employer provide certain benefits to the employee? These might include health insurance, life insurance, disability insurance, pension plans, profit-sharing plans, stock options, car allowances, free lunches, etc.

Noncompete Clauses: Will the employee agree to refrain from working for a competitor within a specified geographical area? Will the employee agree to restrict their activities while employed by the employer? Or will the employee agree to refrain for two years after leaving the employer’s employ?

Confidentiality/Non-Solicitation Agreements: 

Will the employer agree to keep confidential all information obtained through the employee’s job performance, including trade secrets, customer lists, market research results, etc.? Will the employer agree not to solicit current or former employees for employment with competitors?

Disclosure: Will the employer agree to disclose any potential harm if the employee were to leave the company? For example, if the employee was responsible for developing a new product and then went to work for a competing firm, would the employer have to reveal this information to the competitor?

Indemnification – Will the employer indemnify the employee against liabilities arising from actions taken during employment? This includes liability from personal injury, property damage, intellectual property infringement, libel, slander, defamation, and other torts.

Non-solicitation: Will the employer agree not to allow its customers or clients to hire away the employee?

Right to terminate – Will the employer have the right to fire the employee without providing notice or explanation? Will the employer have the power to change the method of termination? Will the employee have the right to resign?

Frequently Asked Questions

Should I have a strong lawyer review my employment contract?

Yes! A good lawyer will always be able to help you to understand your rights under the law. In addition, they may or may not be able to negotiate changes in terms of an existing agreement. If there are no changes, having an attorney review the deal can prevent mistakes when signing the document.

The salary should be set forth clearly. It should specify whether it is base pay or total pay; how many weeks per year are paid at a given rate; and whether additional pay factors apply, such as bonuses, commissions, overtime, etc.

What lawyers review employment contracts?

Every business lawyer reviews employment agreements. The type of business that will affect the drafting of these documents varies widely. Some businesses require only one set of documents, while others have dozens.

Regardless of the type and actual size of the business, every company has multiple types of employees who may need different kinds of agreements.

Who can review an employment contract?

Any lawyer can review an employment agreement. However, some firms specialize in reviewing employment agreements, whereas others do part-time. A lawyer specializing in employment agreements will usually charge more than a general practice lawyer but less than a full-time specialist.

The period required depends upon several things:

  • The complexity of the legal issues involved
  • The number of attorneys handling the case
  • Demands placed on those attorneys’ time

Generally speaking, the longer and more detailed the time frame, the higher the hourly fee. An experienced employment contract lawyer can prepare a contract in just a few hours.

Why don’t you consult a lawyer before signing a contract?

Many people assume that they are familiar with their rights under a contract. They believe that they know what they want and expect from the other party.

Unfortunately, this does not always turn out well. When people sign contracts without consulting counsel, they often find themselves in situations they did not anticipate.

A lawyer’s advice can protect against unforeseen problems. They can also explain the important contractual provisions to the particular circumstances.

How long does it take to draft an employment contract?

It takes anywhere from a few seconds or minutes to a couple of days for a lawyer to review the proposed contract and provide comments. There are two main reasons it takes so long: first, the lawyer must read all of the relevant laws and regulations governing the industry in which the parties operate; second, the lawyer must study the situation’s particular facts.

How often should employment contracts be reviewed?

Employment contracts need readings periodically. This helps ensure compliance with the terms of the agreement. For example, if a company provides health insurance through a group plan, the employee’s coverage renews each year. Similarly, if the employer contributes toward retirement benefits, those payments should continue annually.

If an employee ends his working relationship without definite cause, their pension benefit comes back immediately. Also, they fund any fringe benefit plans according to the contract.

Key takeaways

The employment agreement is an essential document in your business. They should read should be carefully drafted to protect both you and the employee. While there are many components, such as the term limits on compensation should be clearly stated.

If the compensation increases at a rate higher than expected, the employee may feel entitled to more money than initially agreed upon. To avoid this situation, consider making sure the terms of compensation are clear upfront.

References

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