Examining the Pros and Cons of a Written Employment Contract

Illinois business law attorneysWhile the state of Illinois is considered an "at-will" employment state – meaning either employer or employee may terminate the relationship without cause or reason – there are situations in which an employment contract may be necessary. What are these situations, and what potential pitfalls might you, the employer, face? The following explains the potential advantages and disadvantages to written employment contracts.

When Might a Contract Be Necessary?

Employment contracts are often most useful when employers need to protect themselves from the potential of competition, revealing of trade secrets, or problematic employees. However, some companies also use them to entice highly desired employees. For example, an employer might offer a pre-determined salary increase over a five-year time period; putting it in writing may mean the difference between hiring a top-rated employee and losing that employee to your competitor.

Potential Advantages of Employment Contracts

Probably the biggest advantage to employment contracts is the ability control an employee – be it through ensuring they do not share trade secrets or compete against you, or simply ensuring you have clear grounds for termination, should the employee fail to perform their duties as expected. However, there are other potential benefits as well. A contract can also protect you from litigation for wrongful termination, and it offers the ability to clearly define your expectations of the employee.

Potential Disadvantages to Employment Contracts

Although the benefits to an employment contract are notable, there are some disadvantages as well. One of the most concerning is the way a contract may limit your flexibility. For example, if your company undergoes significant changes, or you need to terminate the employee for reasons outside of those outlined in the contract (i.e. no longer needing the employee), you may run into trouble.

This is why it is critical to discuss the possible pros and cons of using an employment contract with your attorney. Further, you should ensure you seek guided assistance in the drafting of that contract, should you decide to use one.

Contact Our DuPage County Business Law Attorneys

At Stock, Carlson, Oldfield & McGrath, LLC, we take the time to understand the unique challenges of our clients and their businesses. In every situation, we strive to find creative solutions to meet their needs. Learn how we can help your company. Call 630-665-2500 and schedule a consultation with our DuPage County business law attorneys today.

Source:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2389&ChapterID=68