The termination of a long-term employee can cost a business up
to two years of salary, benefits, and pension payments for that
employee. With the removal of mandatory retirement ages, that
liability has increased for everyone.
One way to reduce the risk is by using employment contracts. A
well drafted employment contract can limit the amount of money to
be paid to a departing employee to a maximum of 8 weeks of salary
and benefits.
Employment contracts can be used to protect businesses against
the theft of corporate opportunities, employees, customers, and
confidential company information.
Because of the substantial restrictions placed on employees
through these contracts, the Courts review them carefully before
enforcing them. In particular, Courts will examine the specific
wording of a termination provision to ensure its validity. Make
sure your contracts are approved by a lawyer.
