Employment Agreement or Contract
Full Question:
Answer:
An employment agreement or contract clearly defines the terms and conditions, and protects the interests of an employer and an employee when they enter into an employment relationship. The agreement describes the employee’s job responsibilities and the employer’s obligations to provide compensation and benefits to the prospective employee.
An employment agreement must include an offer and acceptance, the name of the parties, the nature and extent of employee’s duties, and the amount of compensation the employer is to pay employee for services rendered. Moreover, the agreement usually sets forth the employee’s continuing duties and responsibilities when the employment relationship comes to an end. In this regard, the agreement may contain a nondisclosure clause. In most cases an employment agreement will ensure that the
interests of the parties are protected in the event the employment relationship comes to an end through termination, death or incapacity.
Following is a portion of a sample employment agreement.
THIS AGREEMENT, dated as of ___________________, 20__, by and between _____________________________, Inc., a corporation organized under the laws of the State of _________________ (hereafter referred to as "Employer") and __________________________, an individual (hereafter referred to as "Employee").
In consideration of the mutual covenants herein contained, and other good and valuable consideration, the parties hereto agree as follows:
1. Employment.
(a) Employer hereby agrees to employ Employee, and Employee agrees to serve as an employee of Employer or as an employee of one or more of its subsidiaries, during the Period of Employment, as defined in Section 2, in such executive capacity as is set forth herein. During the Period of Employment, Employee also agrees to serve as a Director of the Board of Directors of Employer, as well as a member of any committee of the Board of Directors of the Employer to which Employee may be elected or appointed. Employer agrees to take the steps necessary to facilitate the election of Employee to the Board of Directors of Employer as soon as possible after the execution of this Agreement. At its meeting held on the ______ day of ________________________, 20___, the Board of Directors of Employer elected Employee to the additional posts of President and Chief Executive Officer of Employer effective as of the date of this Agreement. It is the intention of the Board of Directors to reelect Employee to such positions during the balance of the Period of Employment.
(b) If after the annual meeting of the Board of Directors of Employer in 20__ or at any time thereafter during the Period of Employment, the Board of Directors fails, without Employee's consent, to elect or reelect Employee as President and Chief Executive of Employer and as a Director of Employer, or removes Employee from such offices or directorship, or if at any time during the Period of Employment, Employee shall fail to be vested by the Board of Directors of Employer with the power and authority of President and Chief Executive Officer of Employer or Employee shall lose any significant duties or responsibilities attending such offices, Employee shall have the right by written notice to Employer to terminate his services hereunder, effective as of the last day of the month of receipt of such notice, in which event the Period of Employment, as hereinafter defined, shall so terminate on such last day of the month; such termination under such circumstances shall be deemed pursuant to paragraph (a) of Section 7 hereof as a termination by Employer other than for material breach or just cause with all of the consequences which flow from such termination.
2. Period of Employment.
The "Period of Employment" shall be the period commencing on the _____ day of ____________________, 20__ and ending on the _____ day of ___________________, 20__, and the period of any extensions thereof in accordance with the further provisions of this Section. The Period of Employment shall be extended automatically without further action by either party for a successive on-year period or periods, not to exceed five (5) such periods, beginning on the ______ day of _____________, in the years 20__ through 20___, respectively, and ending on the ______ day of ___________________ in the years 20__ through 20__, respectively, unless either party shall have served written notice in accordance with the provisions of Section 10 hereof upon the other party not less than sixty (60) days prior to the _____ day of ______________ in the years 20____ through 20___, respectively, of its or his intention that the Period of Employment under this Agreement shall terminate.
3. Duties During the Period of Employment.
Employee shall devote his full business time, attention and best efforts to the affairs of Employer and its subsidiaries during the Period of Employment, provided, however, that Employee may engage in other activities, such as activities involving charitable, educational, religious and similar types of organizations, speaking engagements, membership on the Board of Directors of other organizations (as Employer may from time to time agree to), and similar type activities to the extent that such other activities do not inhibit or prohibit the performance of his duties under this Agreement, or conflict in any material way with the business of Employer and its subsidiaries.
4. Current Cash Compensation.
(a) Base Annual Salary. Employer will pay to Employee during the Period of Employment commencing on the _____ day of _____________, 20__ and ending on the _____ day of ____________, 20__, a base annual salary of $________, during the Period of Employment commencing on the _____ day of _________, 20__ and ending on the _____ day of __________, 20__ a base annual salary of $__________, and thereafter during the Period of Employment a base annual salary of $______, payable in substantially equal monthly installments during each calendar year, or portion thereof, of the Period of Employment; provided, however, it is agreed between the parties that the Employer shall review annually, and in light
of such review may, in the discretion of the Board of Directors, increase such base annual salary taking into account Employee's then responsibilities, increase in the cost of living, increases in compensation of other executives of Employer and its subsidiaries, increases in salaries of executives of other corporations, performance by Employee, and other pertinent factors.
Remaining Form Omitted.