Employment contracts are formal agreements between an employee and an employer that set forth various conditions of the employment relationship including compensation, job duties, termination, and post-employment covenants.
The advantages of an employment contract.
In Texas, an employee’s employment is presumed to be “at-will.” That means an employee can be fired for a good reason, a bad reason, or no reason at all. Having an employment contract, however, overcomes this presumption and typically specifies a term of employment, which means an employee can only be fired for “cause” during the term.
What type of job security does an employee receive?
An employment contract will limit the employer’s right to terminate an employee without cause. If an employee is terminated without cause, he or she will generally receive between six to 12 months of severance pay—this amount is typically negotiated before the employment contract is signed.
What else is contained in employment contracts?
Employment contracts often address and include post-employment restrictive covenants, which restrict a former employee’s post-employment activities for a limited period of time. These restrictive covenants include covenants not to compete, covenants not to solicit customers and employees, and confidentiality and non-disclosure agreements. Employers want these restrictive covenants to be broadly drafted to protect their business interests, while employees want these restrictive covenants narrowly tailored so their restraints are limited after their employment ends. Because employment contracts are legally binding agreements, the parties must abide by their terms. Failure to do so can result in legal action.
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