At Will Employment

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At Will Employment

A Brief Introduction About the At Will Employment

An ‘at will employment’ is an agreement between an employer and an employee who has been hired on a contractual basis. The employee can be dismissed for any reason by the employer, and the employer does not have to establish a just cause or a proper reason for termination. It must be noted, however, that the reason cannot be illegal. For example, the services of an employee cannot be terminated on the grounds of race or religion. As the employee is being hired ‘at will,’ they cannot claim any form of compensation on being dismissed from the job by taking the issue to the court. In the case of ‘employment at will,’ the employee too has the right to leave their job without stating any reason. There are some states that have added exceptions to modify the rule or ensuring that employment contracts change the default expectations. In such employment, there is no scope for collective bargaining.

Who Takes the At Will Employment? – People Involved

An ‘at will employment’ agreement is a legal contract between the employer and an employee, where the employer can dismiss the employee for any reason with no warning. These agreements are entered into by the above parties, where both have the freedom to either terminate the agreement or resign from employment without a notice period.

Purpose of the At Will Employment – Why Do You Need It?

An ‘at will employment’ agreement is entered into by an employer and an employee in case of contractual employment.

The employer needs employees to fulfill perhaps a temporary spike in demand or a sudden project, after which the services of the employee will no longer be required. Once the project is complete, the services of the employee are terminated.

The employee enters into this agreement being fully aware that the employment is based on a sudden demand for a project which is for a specified period of time. The employee voluntarily consents to this agreement and leaves the job when his or her services are terminated.

The ‘at will’ concept ensures that both the employer and the employee understand that the agreement can be terminated by both parties without any warning or giving a proper cause. There are certain states like Alabama, Florida, Nebraska, Rhode Island, and a few more where there is no exception to the ‘at will employment’ agreement. In other states, an employee cannot be fired in violation of a public policy doctrine. Unless the employer has terminated the services of an employee on the grounds of race, this agreement holds good, and the employee cannot challenge the decision of the employer in the court as it is an ‘at-will employment.’

Contents of the At Will Employment – Inclusions

An ‘At Will Employment’ should include the names of the parties to the agreement, which is the employer and the employee.

It should also contain:

  • Date of the agreement: The effective date of the agreement
  • Designation: The title being held by the employee
  • Terms of employment: The terms of the employment which will include the detailed job description, whether the job is a full-time or a part-time one, nature of the job, performance benchmarks as well as the events which will lead to termination of the employment
  • At will clause: The most important section in an ‘at will employment agreement’ would be this clause because this is what enables either employer or employee to terminate the agreement without any reason or warning
  • Notice period: The number of days prior to which notice is to be served by either party and if severance pay will be provided
  • Compensation: The detailed breakup of the compensation payable to the employee including the hourly rate and frequency of payment
  • Commission: Any additional payments to be made in the form of commissions based on preset performance-based criteria
  • Statutory Benefits: Statutory benefits payable to the employee like health or dental insurance in accordance with the laws of the state
  • Out of pocket expenses: Basis of reimbursement of out of pocket expenses
  • Stock options: For employees who are entitled to stock options
  • Probationary period: The period during which the employee will be on probation
  • Leave policy: The number of official leaves the employee is entitled to
  • Doctrine of Confidentiality: A confidentiality clause with regard to important data.

How to Draft the At Will Employment?

While drafting an ‘at-will employment’ agreement, the following points should be kept in mind:

  • Names: The names of the parties to the agreement and the relationship shared between them.
  • Location: The mailing address of the employer should be entered as the principal place of business, and the employee’s correspondence address should be entered in the agreement.
  • Compliance: The agreement should be drafted in compliance with the laws of the state as this type of agreement has exceptions in certain states. If the agreement is being drafted in a state where there are no exceptions, this has to be clearly mentioned.
  • Employee details: The designation of the employee and a detailed job description. It should also be mentioned if this is a part-time position or a full-time position.
  • Termination of services: The agreement should contain two subsections under this head, which would be the employee’s termination and the employer’s termination. This section would also include the days of notice as well as severance pay, if payable. The severance pay would be equal to their pay at the time of termination.
  • Employee compensation: The compensation payable to the employee, including the frequency of payment as well as any additional statutory benefits or employee stock options that the employee is entitled to.

Negotiation Strategy

When it comes to an ‘at-will employment’ agreement, it is important for both the employer and employee to negotiate the best terms before signing the agreement. Since both are aware that the agreement can be terminated without any reason, they should ensure that they avail the maximum benefit they can get from each other.

Benefits and Drawbacks of the At Will Employment

The benefits of having an ‘at will employment’ agreement are as follows:

  • For the employer, the benefit of having this agreement is the services of a poorly performing employee, or someone who has violated the company policies but does not want to take these issues to court will be terminated without any hassles. In case of a specific project, an employee can be hired for the duration of the project, and then their services terminated as soon as the project is over.
  • Flexibility: The benefit of such an agreement for an employee would be they could leave the job without any notice if they get a better offer. In other cases, they might have lost the opportunity. Employees looking for a short-term job opportunity before they get a better offer are an ideal fit for such jobs.

The disadvantages of having an ‘at will employment’ are given below:

  • Uncertainty: The disadvantage for the employee is that the employer can terminate their services at any point of time. They don’t have any collective bargaining power.
  • Legislative action: Some unfair terminations have led to safeguards being provided by some state legislatures leading to hefty penalties for employers. The employee can sue the employer for wrongful termination.

What Happens in Case of Violation?

When it comes to the violation of ‘at will employment,’ both employee and employer can take legal recourse if there has been an illegal termination by either party.

The main feature of an ‘at will employment’ is that both employer and employee are legally allowed to terminate the services without providing a proper reason for doing so. That is the reason why this is known as ‘at will employment,’ as both parties can end the agreement at their own free will.

Though most states come with an exception to the rule, giving both- employer and employees the rights to take one another to court, there are certain states where there is no exception. In such states, the employee can approach the court of law if the employer has terminated his or her employment on the grounds of protected characteristics like gender, age, creed, military status, sexual orientation, religion, genetics, or race. Under such circumstances, the employer will be committing a breach of both Federal and State Laws(1). However, it has to be proved beyond a reasonable doubt by the employee that there was actual discrimination, and the employer did not favor another employee who had more experience and thus a better choice.

An ‘at-will employment agreement’ is drafted when the employer or employee wants to willfully terminate the contract at will without assigning any reason. The employer and employee both ensure that they enter such agreements after assessing the benefits accruing to them since the contract may be terminated by either party at will.

The employer can use the agreement when it wants to either fire a poorly performing employee or get an employee for a particular project.

The employee can enter into this agreement so that they can get temporary employment before they find the opportunity they are looking for. In jobs without the ‘at will’ clause, they would have to wait for the notice period to get over before they are released.

However, both the employer and the employee need to ensure that they don’t perform any action which renders the contract null and void. For example, the employer can be taken to court if the employee is dismissed on the grounds of race or religion.