Understanding Employment Law is Smart Business

“You’re Fired!” Getting well beyond the phrase that Donald Trump made famous is important for employers of every size. The entrepreneurial spirit is thriving but do employers really know the fundamental principles of employment law? One of the most fundamental aspects of employment law is termination but many employers do not know the proper procedure that should be carried out when dismissing employees at any organization.

What an Employer Should Know? Dismissing an employee inappropriately can cost a company thousands of dollars in a lawsuit. This can also be very detrimental to small companies because of the significant dollars in a lawsuit and sometimes the damage to a company’s reputation. In the act of termination of an employee, an employer should take several steps before dismissal to ensure that an employer is protected. These steps vary by state and situation, but an excellent attorney can help prepare the appropriate strategy and plan for a business. For example, many U.S. states have adopted an “at-will” employment contract. This employment contract states that, in the absence of a contract that specifies otherwise, both employer and employee can end the employment relationship at any time for any reason that is not in violation of a law. Even though having an “at-will” employment contract is expedient, it is not always the best employer choice because it can be seen as unethical to an employee who could be dismissed without just cause.

What’s the Role of an Employment Contract? It is a wise strategy to have employees work on a contractual basis with a simple employment contract. An employment contract can avoid cost in the long run because it describes the circumstances under which either party may terminate the relationship, and the notice required. Having a clause in the contract which outlines how and why a party in an employment contract can terminate employment is fundamental as it offers protection to the employer. In the instance of termination, an employer who follows the agreed upon terms of the termination clause are typically freed of any liability. Statistics have shown that wrongful termination lawsuits have risen 260 per cent in the past 20 years and the average cost to settle an employee lawsuit for the small business owner in 2006 rose to $310,845. In 2001, the average cost stood at $130,476. Additionally it is shown if a case goes to trial employees are more likely to win 67 per cent of the time in state courts and 63 per cent in federal courts.

Avoiding these lawsuits is simple! An attorney can craft a clear and concise contractual agreement that outlines the termination procedure with key elements such as notice, performance, or other factors relevant to a business. Additionally the attorney can also incorporate an arbitration clause that allows disputes regarding termination or otherwise to be settled out of court. This is especially beneficial to employers since the courts are harsh to employers. Ensuring the success of any business depends on the owner and businesses should face the potential of the worse by preparing with the best.

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