Author: Maija Pluto, partner
The Importance of Having Employees Sign an Employment Agreement Before Starting Work
When hiring new employees, businesses often focus on attracting top talent and ensuring a smooth onboarding process. However, one crucial aspect that should not be overlooked is the importance of having the employee sign an employment agreement before they commence their duties. This seemingly administrative task carries significant legal and practical implications that can affect both the employer and the employee.
Failing to have an employee sign the employment agreement before they commence work may have the effect of invalidating a contract that is signed at a later date.
Understanding Consideration:
In the world of contract law, consideration is a fundamental concept that ensures a contract is legally binding. Consideration refers to something of value that is exchanged between parties in a contract. For a contract to be legally binding, there must be an offer, acceptance, and consideration. Without consideration, the contract may not be legally binding.
For the employer, offering a role or position with a set compensation package constitutes consideration from the employer’s side.
For the employee, consideration generally involves an agreement to perform the job duties and responsibilities.
Fresh Consideration:
In a situation where the employer has already offered the job and started paying the employee for their services before having an employment agreement in place, there is nothing additional of value the employer is providing to the employee in exchange for signing the contract (which often limits or defines employee rights and responsibilities in some way). The contract may therefore be void due to lack of consideration.
When an employee signs an employment agreement before starting work, it ensures that the agreement is based on fresh consideration – a job is offered in exchange for the employee signing the agreement and agreeing to perform job duties.
In a situation where an employer wants to introduce a new employment agreement to an existing employee, this can be done by offering something new of value, otherwise known as “fresh consideration”.
Some common examples of fresh considerations include:
- Increased Compensation: A salary increase or performance bonus can serve as new consideration.
- Additional Benefits: Offering enhanced benefits, such as better health insurance, additional vacation days, or a retirement plan upgrade.
- Promotions or New Responsibilities: A change in job title could be considered new consideration.
Contracts offering fresh considerations must be carefully drafted and accepted by the employee in writing. If you are unsure about the process or need assistance drafting a new employment agreement, do not hesitate to reach out to a legal professional – they can provide guidance tailored to your specific situation.
Disclaimer:
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Should you wish to discuss our firm providing legal services to you, please contact one of our firm lawyers at info@gaertnerbaron.com.