Many businesses use fill-in-the-blank employment contract templates when hiring new workers. However, the best organizational protection typically comes from a custom contract created for the company’s unique needs and even the demands of a specific position.
Strong contracts can set employers up for positive relationships with workers. Contracts can also potentially limit the likelihood of workers filing lawsuits against their employers during or after their tenure at the company.
How can a customized employment contract reduce the likelihood of an employee filing a lawsuit against the company where they work?
Making expectations clear
Employment litigation often begins with unmet expectations. Workers believe they should receive bonuses or incentive pay because of a prior job or conversation with another employee. Employment contracts typically need to go into great detail regarding the demands imposed on the professional and the compensation provided by the employer. The more thorough and clear a contract is, the less likely workers are to mistakenly believe that a company has failed to fulfill its promises.
Allowing for on-demand termination
State laws make employment at-will in general, but companies still have an obligation to uphold individual contracts. If the company fires a worker halfway through a five-year contract, the employee might try to take legal action. It may be necessary to include a clause explaining that the employment arrangement is still at-will and that the company can terminate the worker without notice for any reason. Including details about disciplinary practices can also help reduce the likelihood of workers suing because of a termination.
Requiring peaceful solutions
Workers frustrated by company activities may turn to the courts instead of trying to resolve things privately and amicably. Many employers now include alternative dispute resolution clauses in employment contracts. Employees subject to such clauses must typically agree to attend mediation or arbitration to work through disagreements in a private setting. Employees can still assert their rights, but employers have less reason to worry about the expense and exposure associated with litigation.
Reviewing current employment contracts with a skilled legal team can help business leaders determine if their contracts effectively protect the business and fully meet its needs. Custom employment contracts can reduce the likelihood of litigation, and can even positively influence the dynamics between a company and its workers.