Components of at-will employment
Although at-will employment gives maximum freedom and flexibility to both parties involved, the employer must make sure that the employee benefits from a suitable work environment and is properly motivated to fulfill their professional duties. Therefore, several basic components need to be in place for at-will employment to work well for everyone involved:
- The position must be properly defined: Any employee must understand what their job responsibilities and requirements are, and other important details such as the work address and work hours. An employer can create the foundation of a successful working relationship by being straightforward with this information.
- The duration of the agreement needs to be outlined: Although the working relationship can be ended unilaterally by any of the parties, the employment contract must properly define a term of employment, as well as how it can be modified or terminated.
- The employee needs to be aware of their professional expectations: Depending on the exact role of the employee, professional expectations can have different levels of detail. In most situations, the employer must clearly outline the performance standards that the employee needs to measure themselves against.
- The compensation’s method of calculation must be clear: Every aspect of the new employee’s compensation needs to be properly outlined from the very beginning. This includes the base wage that the two parties agreed upon, but also other important details such as overtime pay or level of commission, when applicable. If the company offers performance-based incentives, the employee needs to know exactly how to reach them.
- Any bonus or benefit needs to be fully described: Aside from the basic wage and performance-based incentives, the at-will employment contract also has to describe any additional benefit that the employee will be entitled to. These include elements such as health or dental insurance, and the number of yearly vacation days, stock options or employee retirement plans that the company offers its employees.
- Any other elements or requirements that need to be specified: Depending on the nature of the company and the plans of the employers, companies may have special requirements from their employees. Some of them are confidentiality agreements, non-compete clauses forbidding the employee to work for a competing organization within a specified period of time or regulations regarding the use of any copyrighted and patented intellectual property of the company.
- The termination and severance conditions also need to be outlined: Despite being relatively simple and straightforward within the at-will employment doctrine, employee termination also needs to be described in the employment contract. The employee needs to know the details of an eventual termination, such as the notice period or the severance package they may be entitled to.
Related: How to Find Good Employees
Pros of the at-will employment doctrine
There are several advantages of the at-will employment doctrine. Some of them are:
- Maximum flexibility for both parties: An at-will employment agreement gives both parties maximum freedom in their professional relationship. Employers can improve productivity by making it easy to quickly dismiss underperforming employees.
- Reduces the risk of litigation: Employees who feel they have been wrongly dismissed have no basis for a lawsuit under the at-will employment doctrine unless they feel they have been unfairly discriminated for reasons that have nothing to do with their work performance.
- It encourages meritocracy: An at-will employment doctrine gives employers the freedom to promote solely on merit and offers employees the motivation to evolve. Under classic employment agreements, the workers have more protection from termination, which can potentially cause stagnation. Collective bargaining agreements also may force employers to promote based on seniority rather than pure merit.
- It discourages strikes and hold-outs: Aside from more motivated employees, at-will employment also makes them less likely to hold out or to strike, as opposed to employees hired under a collective bargaining agreement. Therefore, if a group of employees does not properly perform their work duties they can be immediately terminated.
At-will employment FAQs
These are some of the most frequently asked questions regarding at-will employment:
Does at-will employment help all parties involved?
Yes, as it gives the employee the same freedom as the employer when it comes to terminating their working relationship. As opposed to other employment agreements, which usually include a two-week notice period after resignation, an employee working under the at-will employment doctrine can usually leave immediately. This means that both the employer and the employee have a common interest in keeping their professional relationship a positive one.
Can an at-will employee collect unemployment benefits after termination?
Most states allow employees who were hired under the at-will employment doctrine and were terminated through no fault of their own to collect unemployment benefits. After termination, the state’s unemployment office will open an investigation that aims to determine whether the employee was terminated under a so-called “good cause” or not. Each state has slightly different ways of determining what a good cause is. Employees that are terminated for any kind of misconduct generally do not qualify for unemployment benefits.
When did at-will employment become law?
At-will employment was adopted within the common law of the employment contract in the late 19th century in most U.S. states. It was later endorsed by the U.S. Supreme Court in the early 20th century and was typically seen as the default rule at first, but states gradually added a number of exemptions and the emergence of trade unions meant that many workplaces had collective bargaining agreements.