What is an Employment Contract?

Cropped shot of an unidentifiable businesswoman extending her arm for a handshake - Concept for blog: What is an Employment Contract?

Although Illinois is an at-will employment state, contracts are a crucial component of the employer-employee relationship. An employment contract can set forth the rights of both parties, outline an employee’s pay and benefits, and state the terms and conditions of employment. These documents can have significant legal implications and it’s essential to ensure that they are well-drafted, skillfully negotiated, and carefully reviewed. From negotiating severance agreements to drafting employment contracts and confidentiality agreements, it’s important to have a business contract attorney with the knowledge and skill necessary to ensure your interests are protected.

Types of Employment Contracts

An employment contract is a document signed by an employer and employee that helps to ensure both parties fully understand their obligations. This type of contract will typically include terms regarding an employee’s job title, compensation, benefits, time off, causes for termination, disciplinary procedures, and company policies. Critically, employment contracts should be specifically tailored to the job and the workplace setting.

There are a variety of employment contracts a business may use, including the following:

  • Severance agreements — These contracts are entered into upon separation from the company and detail the rights and responsibilities of both parties, along with any benefits to which an employee may be entitled.
  • Non-compete agreements — A non-compete agreement can help to protect an employer’s trade secrets and business interests by preventing an employee from working for a competitor company upon separation. Under Illinois law, these agreements are void unless an employee receives adequate consideration and there is no undue hardship placed on them.
  • Non-solicitation agreements — A non-solicitation agreement is a contract in which an employee agrees not to solicit a company’s customers or clients for their own benefit after separating from the company. Similar to non-compete agreements, these contracts are only enforceable if they are reasonable and comply with Illinois law.
  • Non-disclosure agreements — A non-disclosure agreement is a contract that can prohibit an employee from disclosing certain classified information that they acquire during the course of their employment.
  • Confidentiality agreements — A confidentiality agreement is a type of employment contract that is often used when an employee has access to proprietary information.
  • Fixed-term contracts — A fixed-term contract is an employment agreement that specifies a start and end date. These contracts are often used for short-term employment and seasonal employment situations.
  • Consulting agreements — A consulting agreement is a contract that is used when two parties engage in a business relationship while one party is an external consultant to the other.
  • Freelance contracts — A freelance contract is a document that outlines the terms and conditions of a project between a freelancer and client. Not to be confused with an employment agreement, freelancers are not employees. Rather, they are self-employed individuals who do not receive employment benefits from the company with which they have contracted.

Employment contracts can be complex documents — whether you are the employer or employee, it’s essential to be aware that every type of employment contract comes with significant legal implications. An employment contract attorney can help ensure you fully understand the terms, conditions, and ramifications before entering into any agreement.

Employment Contract Disputes

Once an employment agreement is in place, both parties must abide by the terms. Even though Illinois is an at-will employment state, if a contract sets forth certain conditions (such as compensation or a specific length of employment), an employee may be entitled to recover their damages in the event the terms were breached by the employer. In addition to conflicts concerning termination, employment contract disputes can arise for a variety of other reasons. For example, if an employee fails to adhere to the terms of a non-compete or non-solicitation agreement, an employer may be able to hold them legally liable for the damages they suffered as a result.

Whether an employer deviated from the terms of the contract or an employee wrongfully disclosed trade secrets in violation of a non-disclosure agreement, it’s vital to have an attorney who can skillfully assess your case to determine the best course of action. In some cases, a form of alternative dispute resolution such as mediation or arbitration can be used to resolve your matter without the time and expense of litigation. However, if an agreement cannot be reached, litigation may be the only option to resolve the dispute.

Contact an Experienced Illinois Business Attorney

If you require assistance with an employment contract matter, it’s critical to have an experienced business attorney on your side who can advise you regarding your rights and protect your financial interests. Located in Rolling Meadows, Litico Law Group assists clients with a broad scope of business law matters in Illinois. We welcome you to schedule a consultation, contact us online, or give us a call at 847-307-5942 to learn how we can assist you.