Contracts for Term

Employment at will is the rule in Texas. It reflects the premise that if there is no employment agreement, neither the employer nor the employee must continue the employment relationship. An employer is also restricted by statute and public policy. In some cases, employers create express contracts for term with employees. If the employer breaches the contract by dismissing the employee early, the employee can recover damages. The Austin employment attorneys at Wiley Walsh, P.C. can help you pursue a claim regarding a term contract.

Employment agreements can change the at-will doctrine in some circumstances in Texas. A written employment agreement may include a term during which an employee can only be terminated for good or just cause. For example, a written agreement may be for a fixed term, such as one year, two years, or five years. Often, a written agreement includes evergreen provisions that allow the agreement to be automatically renewed for another term except when one party notifies the other that it does not intend to renew the contract, and it will expire at the end of the existing term.

Texas recognizes oral employment agreements. However, under the Statute of Frauds, an employment agreement can be void if it cannot be completed within a year. The Statute of Frauds requires contracts that cannot be completed in a year to be in writing and signed by whoever is being required to act on the agreement in order to bind them. Therefore, an oral contract for a term of five years’ employment would not be valid. The court will compare the date of the agreement to the date on which performance is to be completed under the agreement, and if there is more than a year between these dates, the agreement is unenforceable.

An employer that prematurely terminates an employment agreement can be held liable for damages. The terms of the contract for term will dictate the enforcement of the contract. In one lawsuit, for example, an employer offered to pay an employee $2,000 per month for the rest of the employee's life if he would continue to work for the employer until a particular time. The employee accepted the offer, but they never committed the agreement to a writing. The appellate court explained that if the agreement could be fully performed within a year of its making, the statue of frauds would not apply.

There were two terms in this case. The first was one and a half months, the time period within which performance would be completed. The second stage of performance was the time period in which the payments had to be made. This period was indefinite, since it lasted until the employee died. It could be completed within a year of its making, but it might not be. The appellate court found that both stages of the agreement could be performed within one year of making the agreement, so the statute of frauds did not apply.

More often, a contract for term is reduced to a writing, and in that case, the written terms of the contract will govern whether there has been a breach of a contract. Sometimes an employer states that an employee can be terminated for just or good cause before the end of the employment term. In most cases, the employer drafts the contract for term, and it is supposed to consider possible contingencies that could result in the parties wanting to end the employment relationship before the end of the term, such as a disability or a company sale or merger. If the employer does not consider these contingencies or defines them ambiguously, in most cases, the vague terms will be construed against the employer as the entity that drafted the contract.

Often, monetary damages are the resolution for contract disputes. The monetary damages could include consequential and incidental damages to compensate for foreseeable losses, as well as compensatory damages. The amount of monetary damages varies depending on what your actual losses were and what it would take to put you back in the position in which you would have been had the employer not breached the contract for term.

If you are harmed by an employer's breach of a contract for term, you should consult an Austin lawyer. The remedies and damages available to you will depend on the situation. Wiley Walsh, P.C. represents people in Austin, Georgetown, Round Rock, Cedar Park, Pflugerville, Leander, Del Valle, Kyle, San Marcos, San Antonio, New Braunfels, and Fredericksburg, among other cities. Call us at (512) 271-5527 or use our online form to set up an appointment. We are also available to assist employees who are seeking a discrimination attorney or guidance in other employment disputes.