Employers sometimes enter into contracts with employees that give them rights beyond what statutory laws provide. Contracts are an exchange of promises, or, sometimes, a promise in exchange for a performance of an action. Contracts can be written or oral. There is no required format for a contract. They might be created in formal documents, employment handbooks, emails, conversations, or even text messages. They can sometimes even be implied from conduct or circumstances.
In the employment context, contractual terms often deal with compensation, employee benefits, job duties, duration of employment, termination requirements, and other terms and conditions of the employment relationship.
The promises made in contracts, when properly formed, have the force of law. Attorney Tim Coffield is here to help you negotiate and enforce your contractual rights.
Bilateral contracts are created when the parties exchange promises. For example, if an employer promises to employ a worker for two years, in exchange for the worker promising not to work for certain competing companies within a reasonable area for one year after leaving employment, that could create a bilateral contract. When a bilateral contract is created, each party is generally required to make good on its own promises.
Unilateral contracts are created when one party makes a promise in exchange for the other party performing an action. For example, a supervisor might tell a sales employee that if she works for one more year and makes a certain amount of sales, the employer will pay bonus equal to a certain percentage of the sales. That could give rise to a unilateral contract. The contract is created once the employee worked for the year, or a substantial part of the year, and made the specified sales. When a unilateral contract is created, the performing party is not required to do anything, but if she does the requested action, the promising party is required to make good on its promise.
Employers and employees sometimes enter into written contracts. These typically contain many terms covering various aspects of the employment relationship. For example, when a written contract sets a fixed duration or term of employment, the employer may not be able to fire the employee without good cause. Written contracts may also contain detailed promises about the employee’s compensation plan, in which case the employer may not be able to change the compensation plan without getting the employee’s consent and giving the employee something of value.
Written contracts can be created in a variety of contexts and formats. Depending on the circumstances, emails, text messages, employee handbooks, or other documents exchanged between employers and employees might create written contracts.
As with all types of contracts, the central questions in determining your rights under a written contract are what did the parties intend by the language they used, and whether each party received something of value as part of the deal.
Employers and employees may also enter oral or “handshake” agreements. These exchanges of promises, or promises in exchange for actions, can take place in person or over the phone. While these agreements are more difficult to prove than written contracts, once proven, they are just as valid. Evidence from witnesses and follow-up emails or letters can help reflect and confirm the existence and specific terms of these contracts.
Finally, the overall course of conduct between an employer and its employees can create an “implied” contract. For example, if an employer consistently pays a 10% bonus to employees who exceed a certain production target, and employees consistent work longer than required to reach that target and receive the bonus, that course of conduct might create an implied unilateral contract. In general, the longer and more regular the course of conduct, the more likely it is to form an implied contract.