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Fixed term contracts and ethics part 3 – current employer’s viewpoint

September 23rd, 2008Ethics in Employment, Fair labor practices 4 Comments

This is the final part of a three-part discussion relating to the ethical rights and obligations of a range of parties, from an ethical standpoint, whereby the following situation occurs:

• a prospective employer wishes to make an offer of employment to a prospective employee; but
• acceptance of the offer would constitute a breach or violation of the employee’s current employment contract.

This situation would typically occur where the prospective employee was currently employed on a fixed term contract basis, with no provisions for early termination. It could also arise in cases where other contractual conditions, such as non-compete clauses, prevent the employee from accepting employment with rival firms.

The previous discussions examined the rights and obligations of the prospective employer and the employee concerned in the above situation. Today, I would like to discuss the issue from the viewpoint of the current employer. Should the current employer take action to prevent the employee concerned from accepting the alternative offer?

My initial view
Under my initial viewpoint, the current employer should not be strict in the enforcement of their contractual rights in the above situation.

Under this viewpoint, the employer should consider the basic principle of reasonableness and fairness. This would involve exercising a degree of leniency in cases where early termination of the contract would not cause significant disruption to their business operations.

No ethical problem in enforcing contractual obligations
But my viewpoint has changed – there is no reason why the current employer should not take action to enforce their contractual rights in the above situation.

A contract is a contract – a formalized and binding agreement which confers both rights and obligations on behalf of the parties involved.

Contracts only serve their purpose if all relevant parties fully comply with the terms and conditions of the contract. Moreover, parties to a contract are well within their rights to take whatever measures are necessary to ensure that other parties fulfill their contractual obligations.

Contracts of employment are no exception, and in the above circumstance, the employer has every right to take legal action to prevent the employee from accepting an alternative offer of employment.

I mentioned above the principle of fairness – that an employer should seek to act in a fair and reasonable manner. However, there is nothing unfair about an employer enforcing their contractual rights.

To be sure, some firms may elect not wish to prevent the employee from accepting the offer, either for reasons of goodwill or their reputation as an employer. But that is their own prerogative, and does not arise out of any form of ethical obligation.

The current employer, in the above situation, is well within their rights to take action to prevent the employee concerned from accepting the alternative offer of employment in the above circumstance.

4 Responses to “Fixed term contracts and ethics part 3 – current employer’s viewpoint”

Brad Shorr Says:
September 23rd, 2008 at 8:46 pm
Depending on the jurisdiction, employment contracts are difficult to enforce. In my experience, the courts tend to be biased toward the employee. They do not like to restrict a person’s ability to earn a living. It is therefore very important for employers to write their contracts carefully so that they are enforceable.

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Andrew Says:
September 24th, 2008 at 6:35 am
Very good point, Brad.

There is not much point for an employer to have an ethical right to enforce a contract if they have no legal means of doing so.

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Lauren Bloom Says:
September 26th, 2008 at 10:01 am
Hi Andrew,

Having spent much of my career as counsel to employers, I agree with Brad’s observation that the courts tend to favor the employee in contract litigation. It’s no wonder – the courts tend to believe that employers have access to pricey attorneys (which they often do), and that employees haven’t (which is also often the case).

That said, a good employment contract sets out the terms and conditions to which both the employer and the employee have agreed before “signing on the dotted line,” as we say in the States. If the employer and the employee had a good, honest discussion before entering into the contract, there’s no reason why the employer shouldn’t be able to enforce the contract. As you observe, the employer might not choose to do so, but that’s a matter of choice, not ethics or law.

Cheers,

Lauren
http://www.thebusinessethicsblog.com
drew Says:
September 26th, 2008 at 7:54 pm
Lauren,

Thanks for your input.

I am interested and somewhat surprised to hear that courts in the States take that approach.

As a casual observer, I would have thought that courts would have generally upheld expressly stated contractual provisions, regardless of who they favoured. The only exceptions, I would have thought, would have related to special circumstances, such as where the contract did not meet legal requirements or where the employee entered into the contract under a position of undue duress.

Nevertheless, from what you and Brad say, the reality is different from what I would have thought. Interesting.