To Infinity…

Under the law an employee can be classified in three different categories: an employee, independent contractor, or an agent. Each of these three employment situations has differing legal rights which ultimately affect the relationship.

An employee is considered to be an individual who has entered into a “master-servant” relationship – where their actions are controlled by the master (employer). This type of employment is government by contract law and specific statutes, meaning conditions and limits can be placed prior to commencing the relationship.

Whether the contract is implicit or explicit both the employee and employer have certain responsibilities to which they must live up to. Essentially an employer must ensure: payment of wages, safe working conditions, minimize dangers, and competent staff.

Likewise an employee must ensure: they possess the skills they claim, follow reasonable orders in course of employment, treat the tools and facilities with respect, be punctual and work for a specified time, and they may have fiduciary obligations (as is the case with many professionals). Some responsibilities and obligations may continue on after employment – this is usually through restrictive covenants in the employment contract.

In many circumstances only a verbal employment contract is utilized. Although this has advantages, it is best to have the employment contract down in writing before commencing the relationship. The contract should include all the important provisions, including: pay, hours, description of services, length of term, etc.. During the course of employment if any changes are to be made to the employment contract it is essential that consideration be taken to enforce any such unilateral changes. Such a contract may also include restrictive covenants, which limit the freedoms of an employee after termination of employment.

An example of where restrictive covenants may be used is in the consulting industry – if an employee leaves his/her firm, chances are they may want to start a consulting service for the same sector. An employer can set restrictions on the time-frame and proximity of conducting such services in order to protect the firm’s interests and maintain their client base.

With employees there is always the lingering possibility of termination. Whether the termination is mutual or is initiated through cause there are certain guidelines that must be followed to protect the interests of involved parties. Termination can be specified in the employment contract, setting the length of the term of employment; or termination can be mutually agreed upon by both parties. In such a case there needs to be a reasonable amount of notice given to the employer/employee – so as to not interfere with the functions of the firm. Although in certain circumstances an employer has the right to terminate an employee with just cause. Usually this occurs on the basis of: dishonesty, misconduct, disobedience, incompetence. Employers MUST exercise extreme caution in any case of employee termination, such to avoid wrongful dismissal litigation, which can result in severe monetary penalties. In any case an employee must take reasonable steps to mitigate their losses.