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Employment Agreements: What Are The Benefits?

I often get asked questions regarding the status of employees in Pennsylvania.  My response to these questions has become very standard: “Unless there is a contract or collective bargaining agreement in place, Pennsylvania’s default rule is that all employees are at-will employees.”  Barring some additional exceptions, this is true for every employee in Pennsylvania.  This means that your company can terminate an employee for any reason or no reason at all.  However, I often tell clients that they should have written employment agreements with their employees.  Why do I do this?

Well drafted employment agreements can benefit both the employer and employee.  They can detail the job description and employee’s responsibilities, what benefits the employee will receive from the company (including any severance), specific grounds for termination, and the method for resolving a dispute regarding the employment agreement.  These agreements also allow the employer the opportunity to insert valid restrictive covenants into the employee’s agreement, including non-competes, non-solicits, and confidentiality agreements.

Despite all the above-mentioned detail, these employment agreements can be limited to just those terms, and the employee’s employment is still at-will.  Well drafted agreements will include terms that state that employment is at-will and nothing in the agreement limits the employer’s right to terminate the employee.  In fact, the specific grounds for termination can benefit the employer, allowing for an easier time terminating a subpar employee; employment agreements give employers greater control over the employee.

Nevertheless, employers must be careful as employment agreements bind both employer and employee.  Therefore, any promises made within the employment agreement, including benefits or severance, are binding on the employer and must be provided to the employee as per the terms of the agreement.

Due to this fact, it is best to have an attorney draft your employment agreements.  Not only could your company bind itself to a benefit it does not want to provide to an employee, but it could also find itself bound to a cancerous employee that is not at-will.

If you are located in Philadelphia County, Montgomery County, or Delaware County and have employment agreements that need to be reviewed or are considering using employment agreements for your employees, please contact us.