Drafting Effective Employment Agreements: Keeping the Employer’s Best Interests in Mind, Part 1

This article originally appeared in Anderson Kill's Employment Law Insider (Summer 2006).

With more and more executives, managers and professionals in the modern work place demanding (and receiving) written agreements setting forth their terms and conditions of employment, employers should be aware of what they are “getting themselves into” when providing such written employment contracts. In Part I of our two-part series, we explore the concept of employment-at-will and the benefits of having an employment agreement, as well as the following key clauses: scope of employment, term, termination, base salary and bonuses. In Part II we will explore other key clauses, such as company stock, benefits and vacation, how to deal with confidential information, along with noncompete and other standard provisions.

It is essential that in preparing employment agreements management should take appropriate steps to retain sufficient entrepreneurial rights and operating flexibility. Management also must bear in mind the consequences of providing guaranteed terms of employment for an extended period of time, and should never lose track of the need to retain the right to terminate the employment relationship in a cost-efficient manner.