An employment contract is a great way to make sure that both the employee and the employer are clear on what's expected of them in the course of an employment arrangement. However, despite the clarity and detail that they can bring to an employment situation, they also raise the possibility of a breach of contract. Here's a look at some things you need to know as a business owner about employment contracts and what can happen if they are breached.
Who Can Be Guilty of an Employment Contract Breach?
Employment contract breaches can occur on the part of either the employee or the employer. Since both parties sign the contract and agree to be bound by it, any action that doesn't live up to that agreement is considered a breach. As an example, if the employment contract requires a specific period of notice before leaving and the employee doesn't honor that, the employer can hold them responsible for breach of contract. Similarly, if the employer terminates employment for reasons not permitted in the contract, the employer is guilty of a contract breach.
Understanding Employer Breaches
One common form of employment contract breach is wrongful termination. Many employment contracts include specific stipulations about how and why the employee can be terminated. If your employee believes that he or she was wrongfully terminated, they can talk with an employment law attorney and potentially file a lawsuit.
Another form of employer breach is failure to provide the agreed-upon incentives or bonuses. If there is any stipulation in the contract for the employee to receive a raise or a review at a specific time, failure to do so may be considered a breach of contract.
Exploring Employee Breaches
Employees are also legally bound to the terms of an employment contract. You may have grounds for a breach of contract suit if your employee fails to live up to his or her commitments under the contract.
If the employee quits without proper notice, you may be able to recoup the cost of replacing him or her. It's important to note, though, that it's not always straightforward. An employment law attorney may be able to argue that the breach was not the employee's fault; for example, if a breach was caused by an injury or an accident.
As an entrepreneur, it's important that you understand the terms of any employment contract you use. Before you have anyone sign an employment contract of any kind, have it reviewed by an employment attorney, like one from Timothy P O'Brien, for legal purposes.