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May 13, 201312:23 PMForward HR

with Diane Hamilton and Nilesh Patel

Your employment contracts are not the place for a scavenger hunt

(page 1 of 2)

Can an offer letter be an employment contract? How about an employee handbook? Yes, they can be, but it is much better to not have that be the case. As shown by a recent Milwaukee case, without drafting the terms of a formal employment contract, there can be needless confusion and expensive litigation.

In the Milwaukee case, an employee sued for a breach of contract. However, he had not received a formal employment contract that listed the rights and obligations of the employer and employee. As a result, the basis and terms of his contract had to be determined by the courts. Since no one document provided the full terms of the contract, a judge had to gather them from the employment application, an offer letter, and an employee handbook.

The employee’s application provided evidence there was some contract. The application stated, “I understand if I am hired, I will be given a contract for a specific period of time. By signing that contract, I agree to honor the length of that contract and … [understand the employer] reserves the right to terminate a contract for just cause reasons as stated in the … handbook.”

The offer letter was likely the formal contract because it stated, “Summer employment was not part of this contract.” However, an offer letter is too short a document to use as the formal contract. An offer letter is meant to quickly list the key characteristics of the employment offer, such as salary, general work responsibilities, title, and expected start date. It is not the place to list exceptions or limitations on an employee’s rights, especially when such terms are spread across two other documents.

In this case, the employee’s offer letter never clarified that the “just cause” standard – mentioned in the job application and then defined in the employee handbook – did not apply to him. This omission resulted in the employer needing to convince a trial court and then the appellate court that the handbook provision clearly did not protect this type of employee.

(Continued)

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About This Blog

 Diane Hamilton, PCC, SPHR, is the owner and founder of Calibra, a coaching and consulting firm focused on maximizing leadership potential. Nilesh Patel is the principal attorney of the Mahadev Law Group, LLC, which focuses on human resources and employment law issues for organizations. He can be reached at npp@mahalawgroup.com. Both bloggers are members of Wisconsin SHRM, which is dedicated to being the state leader in HR management and the premier source for HR expertise and resources. More information can be found at www.wishrm.org. You can follow the WI SHRM blog at http://wishrm.wordpress.com.

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