When Can an Employment Contract Be Implied?

What Factors Will Cause Employment to No Longer Be “At Will”?

In New Jersey, as in almost every state, employment is generally considered to be at will. That means that either the employee or the employer may end the relationship at any time and for any reason, as long as it is not in violation of the terms of a valid employment contract, in violation of the law, or contrary to public policy. There are, however, situations where, even in the absence of a written agreement, you can bring a lawsuit for wrongful termination, regardless of whether your discharge was contrary to law or public policy. These are typically situations where a court may find that an employment agreement was implied.

What Is an Implied Employment Contract?

An implied contract is simply one that has not been formalized in a specific writing, but instead is determined to exist because of oral or written representations made by the parties. While there are certain types of agreements that must be in writing to be enforceable, employment agreements are generally not among them. To form a contract, there must be evidence from which a reasonable person would conclude that there was an offer made, acceptance of that offer, and something of value exchanged by the parties (referred to legally as “consideration”). It must also be shown that the parties had the capacity to enter into a contract, that the representations that led to the contract were made voluntarily, and that the subject matter of the agreement was legal.

What Types of Representation Might Imply an Employment Contract?

The representations that provide the basis for an implied contract may be made verbally during a meeting, in a memo or other written communication, or even be found in a company’s employee policy manual or handbook. The types of representations or actions that support the existence of an employment agreement include:

• Verbal or written statements to the employee indicating that his/her job was not in jeopardy, provided there were no violations of company policy
• Language in a personnel manual or employee handbook identifying the types of actions that can lead to discipline or termination, including progressive discipline
• Evidence that, in the past, the employer only terminated prior employees for cause
• Whether industry practice suggests that a person with similar experience and qualifications would be considered protected by an employment contract

Contact Attorney Howard N. Sobel

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