An employment contract is a written, binding agreement between an employer and a prospective or current employee that, when properly drafted, can be a highly effective way of protecting a company's financial and intellectual resources.
Not every employment relationship will require a contract. Rather, employers most often require an employment contract as a condition of employment when the employee holds a position that is highly influential (e.g., chief executive officer), involves sensitive trade secrets or client information (e.g., sales positions, engineers, and computer programmers), or requires a significant amount of “front-end” cost (e.g., relocation packages, extensive or specialized training, sign-on bonus).
In addition, employers may use a separation or severance agreement at the end of the employment relationship or may enter into agreements that deal with a limited subject or scope, such as arbitration agreements or noncompete agreements.
All employment agreements are legally binding on the employer and, therefore, employers are best served by having them drafted and reviewed by an experienced employment law attorney.
Contract law is a particularly complex discipline that relies largely on common law, which is law as developed by judges and court cases. Contracts must generally be interpreted on a case-by-case basis that can change significantly depending on the facts of the particular agreement between parties.
Because of the variability and nuance involved, and the risk that comes with an improperly drafted contract of any type, it cannot be overemphasized how important it is for employers to seek the assistance of legal ...