The subprime disaster has catapulted employment contracts, and the golden parachutes that sometimes come with them, into the limelight. While negotiating $100 million in severance pay that Countrywide Financial CEO Angelo Mozilo could receive is certainly not the norm, there are certain bases that every employment contract should cover.
Mike Hyatt, Chief Strategy Officer of N2Growth, provides a helpful overview of what every contract should include in his article entitled, Management Matters with Mike Myatt: 6 Tips to a Better Employment Contract. The article outlines 6 main points: (1) Job Description, (2) Term, (3) Compensation, (4) Indemnification, (5) Termination, and (6) Winding Up Provisions.
An ounce of prevention equals a pound of cure. Employment contracts protect an employee’s professional and financial interests in the event that the employer has a sudden change in heart. Every contract will contain its own nuances. The more an employee understands the details of what his or her contract should include going into the negotiation, the smoother the transition down the road.