An Employment Agreement, whether formal or informal, states the terms and conditions of the relationship between employer and employee. These terms may include employee compensation, benefits, employer expectations, governing rules, discipline, and terms of discharge (or quitting).

Here is what you need to know when considering a job, reconsidering the Employment Agreement mid-stream, or contemplating the after-effects of discharge, constructive discharge, or a voluntary quit.

I. Forms of Employment Agreements

A. Collective Bargaining Agreements:

Collective Bargaining Agreements are binding agreements that are negotiated with one or more unions; one or more employers; and two or more employees. This type of agreement is a written agreement between the employer and a union that outlines many of the terms and conditions of employment for employees in a bargaining unit. The terms and conditions are reached through collective bargaining between the employer and the union. Such agreements describe termination of employment terms and the union member’s right to file a grievance and be heard on that grievance, and the steps within the grievance process, usually starting with direct negotiations, then progressing to mediation, and then to binding arbitration.

B. Individual Employment Agreements:

An employment agreement is entered by and between — and signed by – the employer (management) and one employee. It details specific terms and conditions for the employee in a customized way. This employer and employee are not bound by a collective agreement. The terms and conditions could relate to a specific term of months or years, whether termination is based on “for cause” or “at will” factors, whether the employee is burdened with a non-compete clause, and whether trade secrets/intellectual property protection applies. These most typically occur in high level management settings. Most individual employees do not have such agreements.

C. Handbook Agreements:

An employment handbook sets forth terms and conditions of employment between many employees and one employer. It is neither a Collective Bargaining Agreement nor an individual contract of employment. In New Jersey, a Handbook Agreement is considered a “quasi-contract”, which is deemed binding upon the parties, even if it is not signed. Often, Handbook Agreements go into specific details as to workplace policies, programs, and benefits, and may (but do not always) include an Alternative Dispute Resolution provision, similar to the Collective Bargaining Agreement, to assure that both parties stay out of court.

II. What You Should Know about Pre-Employment Job Agreements or Job Offers.

Once the job description is defined and both parties understand the type of agreement that will be in effect, the next step is getting your job offer in writing. A job offer letter is a condensed pre-employment agreement that outlines the basics of your employment. Your job offer letter should provide you with the rules related to your rate of pay, hours of work, time off, severance pay, and other topics of importance. Offer letters almost always state that the terms and conditions do not give any guaranteed term of employment, and that employment remains “at will”. That is, you can quit or be fired at any time, with or without good cause.

Although there are workplace rules and regulations that protect your civil rights, there are no iron-clad agreement rules that apply to employees in the state of New Jersey. Therefore, each employment agreement will be different and New Jersey employment is almost always considered “at will“.

III. Pros and Cons of Verbal & Written Agreements

Most employment agreements are in writing — yet they don’t have to be. An oral agreement is just as binding, just much harder to prove. Although a verbal job offer covers important specifics like the term of employment, duties, and compensation, what happens if disputes arise between the owner and you? Without a written document, it’s their word against yours. A written agreement is easier to enforce.

A written agreement also benefits an employer, because the employee agrees to provide assured services in exchange for payment and makes other valuable promises (examples: not competing upon leaving, not revealing company secrets, or not taking company property.) The enforceability of those contractual promises is a subject for another blog post.

Each owes the other a duty of mutual confidence and trust, and to make only legal demands on the other. Every employee is under the obligation to carry out their assigned duties, as instructed, to the best of their abilities. Every employer is obligated to compensate employees promptly and provide all promised benefits; to protect employees from harm or injury; and to pay for losses and damages arising from workplace accidents. There are some legal responsibilities imposed by the federal and state government that depend on the number of employees in the workplace (examples: Family and Medical Leave Act (federal) and Family Leave Act (New Jersey)) and others that require no such minimum (such as the federal Americans With Disabilities Act).

Employers have a special obligation to deal fairly with the employee. This is called a duty of “good faith and fair dealing“. If an employer treats the employee in a grossly unfair way, the employer could be held liable for violating the agreement — and breaching the duty to act in good faith. The employee also could have the right to quit and seek Unemployment Benefits for “constructive discharge”, whereas a regular “quit” would not so entitle the employee.

IV. Do You Understand the Terms of Your Employment Agreement?

You should take the time to review your employment terms carefully before agreeing to them, whether arising from a Collective Bargaining Agreement, an Employment Contract, or an Employee Handbook. If there are any terms you do not understand, you should consult immediately with an experienced employment lawyer who regularly represents employees — before you take the job.  You can also seek mid-course legal review, if you are considering a step that may be at odds with a governing document or the employer challenges your conduct under the same.

V. Conclusion

If you have any doubts or discomfort with the terms and conditions offered, want to amend the terms, or believe your employer violated the agreement or breached “good faith”, then please contact us today, whether in writing or by phone. We will arrange a legal consultation — and always do our very best to help you overcome adversity.