The Value of Employment Contracts
Employment contracts can be of great value to the employer or employee depending on the language, restrictions, and requirements detailed in the contract. For example, in 1987 when Bank of America CEO Samuel A. Armacost, was forced to resign, he had an employment contract that was written in his favor. For three years Bank of America was required to pay him $47,000 each month along with all of his club memberships, health care and office space. The bank was even required to continue paying the salary of his executive assistant. An employment contract is meant to protect the employer or employee just in case a job ends negatively.
Some of the aspects established in a contract include the duration of the job, job duties, compensation, benefits, and the reasons for possible future termination. When it comes to job duration, employers who find an individual they consider valuable can lock a person into their position for a set time through an employment contract. Job duration contracts are very common in the entertainment fields.
One of the most common uses of employment contracts are to protect the intellectual rights of a company. Many companies prohibit professionals from transferring to a competitor. If a person works in a certain sector and is terminated, a contract can legally prohibit them from working for competitors.
Although employment contracts can be verbal, it is wise that they are written so that tangible documentation is available in the case of breach. Many contracts are used to protect companies from law suits. More employees are taking legal action against employers for what they consider unfair or unlawful termination, but employers are increasingly placing language in employment contracts to protect themselves from legal trouble.
Under federal law, there are certain contractual benefits that every employer must provide including a fair salary of at least minimum wage payment, lunch or bathroom breaks, and sick or maternity leave. Employment contracts are vital to set the tone between the employer and employee. A contract symbolizes the type of relationship they will have, and what each can expect from the other.
Employment contracts offer the value of security and protection. If things don’t work out between the employer and employee, a contract establishes what will take place. Over the years, as society has become more litigious, contracts are frequently used in the workplace. Employment contracts are a valuable commodity that can be used to ensure each individual’s rights.