SEPARATION AGREEMENTS, AND
Employment contracts are binding agreements which lay out the terms and conditions of an employee's employment. These terms and provisions in employment agreements can have a massive impact on many facets of an employment relationship, and may include obligations that survive even after the employment has ended. Some examples include non-compete provisions, non-solicitation provisions, and non-disclosure provisions.
Employment Contracts vary significantly depending on the particular industry, the parties contracting, and the rights and obligations the contract seeks to create. An employment contract is not the same as an employee handbook. Employment contracts for a set employment term will often include many of the following provisions: length of the employment; salary, benefits, and commission and bonus (if any); job duties and responsibilities; method of renewal and notice procedure for non-renewal; termination for cause and a description of what constitutes cause, and; non-compete provision. An employment agreement for a term of employment longer than one year must be in writing under the New York Statute of Frauds.
Separation Agreements (severance agreements) are a type of contract offered to employees upon a termination. They usually include a payment to the employee in exchange for giving up certain rights, such as the right to sue the employer in the future. While employers are generally not required by law to provide severance or separation pay, some employees may contract for severance pay, and many employers may offer a severance or separation agreement even absent a requirement to do so. Oftentimes these agreements include provisions concerning intellectual property rights and duties relating to confidential information, as well as restrictive covenants and confidentiality and non-disparagement clauses.
Executive Compensation is the broad term used to describe compensation agreements and packages and are often tied to performance and/or retention conditions . These agreements can be offered at the start of an employee's employment or at anytime thereafter. These agreements are increasingly offered with a myriad of employee obligations such as restrictive covenants.
Employees should also be aware of the different forms that compensation in these agreements can take and the implications of each. Equity award agreements will award employees either the full value of the underlying equity, or else provide only for the appreciation value of the equity between two specified points in time. Restricted stock and restricted stock units fall into the former category, while stock appreciation rights and options fall into the latter.
Deferred compensation in these agreements usually vests according to specified vesting schedules and conditions or, in the case of equity agreements, may be subject to forfeiture provisions. Employees who are terminated or who resign should make sure to fully understand any obligations and vesting conditions in their agreements as well as any potential effect subsequent agreements (such as separation agreements) may have on their compensation agreements.
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