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Ipglossary.com is a practical glossary for managers, executives and technologists as well as lawyers working in IP in an international environment. The glossary provides practical explanations of key legal and business terms in a large number of technology related fields including intellectual property, licensing, venture capital, corporate and securities law, antitrust and competition law, and of course terms relevant to technology, in general. Read more
The vast majority of the United States has what is known as an “at will” employment system. In effect this means that (absent a written contract that changes the employee’s status, e.g., a union agreement) an employee can be dismissed without cause, at any time, with only statutory or contractual severance (which has led some commentators to dub it “at whim employment.”) Indeed, it might be said that having a stated reason for the employee’s dismissal is more dangerous, since such a reason may be actionable on grounds of illegal discrimination, whistleblower protection, etc.
A key side effect of at-will employment is that it is relatively easy to modify an employee’s terms of employment, for example, by requiring an existing employee to sign a non-disclosure agreement. By contrast, most of rest of the industrialized world takes the view that an employee, upon completion of a probationary period, has, absent misconduct or incompetence, a right to continued employment, breach of which entitles the employee to compensation. The existence of this right means that employment terms cannot easily be modified by an employer, without effectively changing the contract between the employer and the employee. Moreover, any substantial reduction in the quality of the terms offered to the employee can be considered a “constructive dismissal,” i.e., the equivalent of firing the employee, which again could give rise to a claim for compensation.
Taking as an example a post-employment non-disclosure agreement example, for such an agreement to be effective there must usually be both consent and consideration on the part of an already existing employee, i.e., the employee must agree and must be paid some real benefit (consideration) for entering into the additional contractual obligations of the non-disclosure agreement. Failure to understand the impact of the right-to-continued-employment is a major pitfall for U.S. trained managers dealing with personnel issues outside the U.S.