What is an Employment Contract?

An employment contract is an agreement that sets forth the terms and conditions of an employment relationship.  Employment contracts can include a wide variety of terms, or they can be very narrow and specific.  These agreements often discuss an employee’s salary, benefits, or other compensation, including bonuses and commission payments.  Employment contracts often outline or describe the employee’s obligations and employer’s expectations as well.  This may include things such as a workplace dress code, business hours, or other company rules and policies.

 

In addition to outlining the details of the employment relationship, employment contracts may also specify the ways in which the employment relationship can end.  Under normal circumstances, employees in the state of New Jersey are considered “at-will” employees, meaning that in the absence of some other agreement, either the employee or the employer can terminate the employment relationship at any time or for any reason.  If an employment contract exists, however, the specific language contained in the contract can modify this relationship.  For example, an employment contract may specify that an employee is guaranteed employment for a certain term or that the employee can be terminated only for good cause.

 

In certain situations, an employment contract may also contain terms that affect the parties even after the employment relationship ends.  One type of employment contract, known as a non-compete agreement, can limit when, where, and for whom the employee may work after leaving the current job.  A severance agreement, on the other hand, can specify certain compensation and benefits to which an employee is entitled after the employment relationship ends.

 

Employment contracts can come into existence in a variety of ways.  They can be express or implied, written or oral, and they can even be created by the language in an employee handbook or manual.  Although oral and implied contracts can be enforceable, it may be in your best interest to ask that the terms of your employment be written down in a formal agreement.  Formal, written agreements provide clear evidence of the contract and its terms, making it easier to enforce.  The advisability of requesting the contract in writing, however, depends on the specific circumstances of your personal employment relationship.

 

Employees often instinctively agree to the terms of an employment contract because they are under the impression that they must.  In some instances, however, an employee has the right to negotiate the terms of the employment contract.  In all cases, employees have the right to understand the terms and conditions to which they are asked to agree. An understanding of the contract terms and the possibility of negotiation is particularly important in protecting your rights in the event of an inherently unfair or possibly illegal contract.

 

Because employment contracts, their terms, and the situations that give rise to them can sometimes be complex or confusing, it may be in your best interest to contact an experienced employment attorney for help understanding how an employment contract may affect you, your job, and your legal rights.