Employment contracts in Texas detail the terms of an individual's employment with a specific business or organization. Because Texas is considered an "employment at will" or "right to work" state, a job offer does not necessarily require an employment contract. Most states, including Texas, hire employees on an at-will basis, meaning that either the employer or the employee can terminate the working relationship at any time. However, an employer may not use this law to end an employee relationship for an illegal reason, such as race. Workers who have an employment contract and those who are union members are not considered at-will employees.

Importance of an Employment Contract

The purpose of an employment contract is to create enforceable obligations and rights for both the employer and employee. While an employer might provide various agreements for you to sign when you start working for them, they typically indicate your status as an at-will employee. You will likely also be given an employee handbook that details rules, regulations, and grounds for termination, but this document should state that it is not a binding contract.

In some cases, an employee may be asked to sign an employment contract that makes them ineligible for at-will status. For example, this type of contract may indicate that you will remain employed at the company for a certain number of years and include specific grounds on which the employer can terminate the contract. 

An employment contract must specify that the employer will not terminate the employee during the contract period without due cause and must delineate specific grounds for termination. Common examples include failing to meet financial goals, failing to perform duties, or being convicted of a crime.

Oral Employment Contracts

While an employee can be removed from at-will status with an oral contract, the existence of such a contract is difficult to prove in Texas courts. The oral agreement must be proven as specific, clear, and expressed, rather than implied. An employment contract lasting longer than a year must be in writing. This includes claims that an employer promised employment for his or her entire lifetime.

Terms of Employment Contracts

An employment contract may also specify the terms under which an individual is hired by a company or vice versa. This constitutes a legally binding agreement in the eyes of Texas courts. While employment contracts are not required for use by Texas employers, these legal documents are increasingly common. Terms for an employment contract can arise from any of the following sources:

  • Verbal agreement
  • Written agreement
  • Mutual understanding (implied agreement)
  • Employment offer letter
  • Employee handbook
  • Noticeboard
  • Email
  • Fax
  • Collective bargaining agreement

For an employment contract to be modified, each party must agree on the updated terms. An employer can modify certain aspects of the contract for economic reasons, including pay rate, work hours, duties, or work location, as well as to fix an error in the original contract or when disciplinary action is taken.

Employees can request that an employment contract be modified to create a better work environment, higher pay, more holiday or vacation time, or different work hours.

Breach in Contract

When either the employee or employer violates the terms of an employment contract, a breach in contract occurs. This is the case whether an oral or written agreement is breached. If you think that an employment contract has been breached, you should first try to work out a solution directly with the employer. If you decide to sue for breach of contract, you will need to prove financial loss. Your employer also has the right to counter sue for damages.

Job Duties and Descriptions

Detailed job descriptions and duties are an important aspect of any employment contract. The job duties and scope of work must be clearly defined, as do the duties that fall outside this individual's scope of work. These provisions are designed to prevent misunderstandings between the employee and employer, define benchmarks that indicate success in the role, and limit activities that are not related to the job during specified work hours. Having a job description in place protects an employee from having his or her role changed without notice.

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