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The value of an airtight employment contract

Contract disputes can arise in many ways throughout the regular course of business, and sometimes employers can unwittingly breach an employee’s contract and leave themselves exposed to breach-of-contract suits or find themselves unable to enforce non-disclosure agreements and other post-termination terms of a contract. An airtight employment contract built with an employer’s particular needs in mind and aware of potential enforcement pitfalls is an essential part of a business’s toolbox.

There are numerous intricacies that can be problematic for businesses with insufficiently written contracts. Qualified, experienced legal counsel can help any business avoid these and many more missteps on the way to continued success.

There are certain circumstances in which an employer’s actions may be considered a breach of contract which invalidates provisions of the employee’s contract. Post-termination non-disclosure agreements and non-compete agreements are particularly susceptible to this sort of misstep. Often, this variety of error is likely to occur in management. For example, perhaps an employer hires an employee and contractually stipulates a certain per-month guaranteed pay structure, perhaps with bonus incentives for exceptional performance. After a year of substandard but still acceptable performance by the employee, a member of the management believes it will incentivize this member of the team to be placed on a strictly-commission pay structure, and makes the change to the employee’s compensation. However, the original contract is not adjusted to reflect the new pay structure, and a unilateral breach of contract is created. The employee is frustrated by this change and decides to go to a competitor. In this scenario, the first employer may find itself unable to enforce the non-compete agreement provision of the employee’s original contract.

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Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

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