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Employment contracts protect workers from at-will firings

Most average jobs do not have a set end date. The employment ends when the worker quits, retires or is fired. Unless the employer terminates the worker for an illegal reason, such as for his or her age, race or gender, it generally has wide latitude to do so.

However, some workers operate under an employment contract. Employers typically use these contracts when hiring high-level executives like the CEO, COO or CFO. The terms of the agreement can be complex. It may limit the employer’s right to fire the employee, often requiring the employer to show “good cause.” The contract may include a list of terms and conditions, called benchmarks, that one or both sides must meet.

In addition, the employment agreement will likely set out the terms of the employee’s compensation. Besides salary, executives tend to participate in bonus programs that can be quite complicated.

The “good cause” language mentioned above makes it more difficult to terminate a worker. Workers who do not have a contract are called “at will” employees, and can lose their job for almost any cause, absent illegal reasons like discrimination or retaliation against a whistle-blower.

Protection from termination except for good cause can help employees, both while they work there and if they are ever fired. As with any contract, a breach by one party — in this case, the employer — can lead to a cause of action by the other party. In other words, the terminated worker may be able to get compensation in court for wrongful termination.