How to prepare a basic employment agreement

The following article is for general information only and is not intended to be a legal opinion or legal advice. For advice about specific factual situations, consult an attorney.

Hiring for character is as important as selecting for computer skills and sales ability.

In my law practice where I advise the owners and management of agencies, I have found that people can be taught many things in the office, but they have to walk in with impeccable integrity.

On a weekly basis, I am involved in a telephone consultation with an agency owner that runs along the following lines:

"An agent in my office was hired quite some time ago, and we were friendly, attending social celebrations together. She became the manager of our agency. Two weeks ago, she left and stated that she was leaving the industry. Now, a number of corporate clients are calling, wondering why she has contacted them directly, soliciting their business for a competing travel agency in town. The Rolodex is missing from her desk, and she took her sales journals with her."

Another scenario is the corporate on-site agent who has been at a corporate client's office for two years. Suddenly, the agency owner becomes aware that the corporate agency employee is shopping the account to competitors. Moreover, the agency employee has been offered a job by the corporate account and has switched loyalties from the agency employer to the corporate client.

Does any of that sound familiar? What can be done?

Employment agreement

A written contract reflects the factual understanding of the parties at the start of an employment relationship.

Even without a written agreement, a claim for unfair competition can be brought on equitable grounds, such as tortious interference with contractual relationships.

A written contract, however, carries the extra power of predicting certain behavior and outlining how a breach should be resolved.

I recommend that all employees be asked to sign an employment agreement at the start of the employment relationship.

It should contain, at least, confidentiality provisions and a covenant against the solicitation of your client database.

Components of an effective employment agreement essentially reflect many of the following points:

Devotion of full attention and energy, fulfillment of sales goals and commitments to clients are usually included.

It is important also to address strict adherence to the rules of ARC, the International Airlines Travel Agent Network, the Cruise Lines International Association and state and federal law, and not to allow issuance of travel documents until the agency has received payment in full.

Maintaining the ability to hire and fire at will is important, and, by the same token, realize that the employee has the right to leave at will, too.

Some employment relationships are governed by written contracts, which provide a contract term and state that the employee may be terminated during the term of the contract only for "good cause" or for "just cause."

These contracts are generally for chief executives of travel companies, or they may be part of the agreement in the sale of an agency where part of the payment for the agency is put into an employment agreement with a former owner.

Both situations point out how the nature of the relationship needs to rise to a certain level before the employer should agree to diminished protections under the law.

If the annual salary is the only figure mentioned, the agreement might be construed as an annual contract, and therefore, if you, as the employer, are found at fault, the full balance of an annual salary could be included in damages.

It is important to cancel such time if it has not been taken by the end of each year in order to cancel the corresponding obligation to pay.

Another consideration is setting out the required approval by the employer prior to taking vacation time, and the type of notice required for an accrued sick day.

It is wise to include this kind of information in both employment contracts and employment manuals.

Statutes and case law vary from state to state; however, it is understandable to a fact finder that an employer wants to keep his clientele intact.

This kind of provision does not prevent an employee from going to work for another entity in the agency industry.

However, it does lay out the parameters as to what is fair.

Such a provision may be very effective at preventing unfair solicitations while the employee is still working at your agency as well as after the employment has ended, whether voluntarily or otherwise.

The type of information protected would include names of clients, employees and vendors.

Quite simply, it is insurance against theft by employees. It is inexpensive and useful.

In an employment agreement, I always include a representation that the employee is capable of being fidelity bonded, meaning that there is no past history, which would prevent an insurance company from writing insurance for the travel agency employer.

This lets the staffer know you will be obtaining a fidelity insurance policy and causes the new staffer to provide some assurance that you will be able to get the bond.

I encourage all employers to obtain such bonds for employees who handle large amounts of money belonging to third parties.

Depending on state law, this could enable you to immediately dismiss the individual who attested that he or she could be bonded when that turned out to be false.

This issue comes up a lot with repeated debit memos associated with the same employee who is told to stop an offending activity but who continues to do it.

However, some states don't allow you to offset those losses from employee salaries even if the staffers would consent because that would be counter to those state's wage and hour laws, which state an employee should be paid for time worked regardless of any errors.

But a word of caution: Be sure to check your state law on this matter so as not to run afoul of the wage and hour statutes.

In addition, if you pay commissions for new business attracted by salaried staffers, insert a time frame after which no more commissions will be payable in connection with that new business.

This requires the staffer to obtain the employer's consent prior to accepting secondary employment in the travel industry, such as a second job with another agency, tour operator or other travel-related business.

The list then serves as a mutually agreed-upon separate group of clients that the employee will or can take upon leaving employment.

It is important to keep a copy in the employee's file.

Rose A. Hache is a Houston-based attorney whose practice is travel law only. A former assistant counsel at ASTA headquarters, she has been in her own practice for nearly 21 years.