If you are contemplating whether or not to have employment contracts for some or all of your employees, it is important to consider both their pros and cons. In addition, it is best to speak with a West Palm Beach labor and employment law attorney who can review the specifics of your particular situation and help you understand the possible advantages and disadvantages.
In the meantime, here is a look at some of the pros and cons of employment contracts in general.
Possible Benefits of Employment Contracts
When you put the terms of the job requirements in writing, the employee has a clear understanding of what to expect and what he or she will be required to do in exchange for what you will pay the employee. A contract can also address many other important details like:
- Is this a permanent position or will it last for a specific amount of time?
- The benefits that are included, so there is no confusion (i.e., health insurance, vacation accrual, sick time)
- What the grounds are for termination.
- How to resolve disputes that may arise over the course of the agreement.
- The importance of protecting your trade secrets and client lists.
- Ownership of work product, like intellectual property.
An employment contract can be beneficial if you want to exercise greater control over how an employee leaves your company. An example would be hiring for a position that requires specialized training. You do not want to bring someone on just to have them quit two months later and you are forced to start the process over again. Locking someone in to a specific amount of time can take the uncertainty out of these types of positions, or at least require them to give enough notice (say 90 days) so you have time to find a replacement.
Employment contracts can help protect your sensitive company information, and they can also help entice highly-skilled candidates away from other potential employers.
Possible Disadvantages of Employment Contracts
An employment contract doesn’t just bind the employee, it also binds you as the employer. That means your flexibility can be limited in situations where the employment contract becomes a problem. If you want to terminate a contract early or alter the terms, you would have to renegotiate the deal, which could mean the employee doesn’t agree to it or you end up paying more money.
Contracts also bring with them an added obligation to act in a manner according to the “covenant of good faith and fair dealing.” If you act in a manner that the judge or jury finds unfair, you could be held responsible for more than just violating the contract itself.
Employment contracts can carry a larger administrative burden in some cases. If your company changes the terms of time off or other benefits, you have to make sure that these changes don’t breach existing agreements. That may be ok if you only have a few employees on contracts, but in situations where you use them frequently, it will be an arduous task for your human resources department.
Contact a Florida Employment Law Attorney
If you have questions about employment contracts or have a pending breach of contract issue, contact Pincus & Currier, LLP today to schedule an initial consultation.