What is Retention Agreement Drafting?
A retention agreement is a legally-binding contract in which an employer offers an employee compensation to stay with the company, such as to provide support for a challenging or critical event.
If you need to draft a retention agreement, there are some important tips to consider before you start.
Read the rest of this article for key terms that must be included in it, drafting tips, and how a lawyer can help you with the contract drafting process.
What Key Terms Should be in a Retention Agreement?
A retention agreement should contain the following essential information:
- Retention period. Explain the timeframe in which the employee must remain with the company. This can be tied to a specific project milestone.
- Financial incentive. State the financial compensation offered, which can be calculated as a percentage of the employee’s salary.
- Payment schedule. Provide information about the exact dates or conditions that will trigger the payment or bonus.
- Clawback clauses. Include provisions that require the employee to repay some of or all of the funds if they leave the agreement early or breach the contract terms.
- Acceleration. This clause details how the bonus is handled should the company be sold or experience another significant change.
- Dispute resolution. Should parties be unable to resolve a disagreement, the agreement should include a dispute-resolution clause to help them, such as mediation or arbitration.
What are Tips for Drafting a Retention Agreement?
Clarity regarding payments and timelines is important in a retention agreement, but you also need to consider additional information to make the contract specific and minimize disputes. Here are some drafting tips.
Explain the Retention Period
State the effective start and end dates for the retention period. It’s a good idea to include other dates, such as payment deadlines.
Detail Payments
You should state exactly what retention bonus amount is included and how it’s calculated. Identify the type of compensation provided, such as cash or stock options.
Address Termination
Be clear when outlining what happens if the company terminates the employee’s employment, or if the employee dies or retires. Cover various scenarios to provide clarity to both parties so that they know if or when a partial bonus will apply to their situation.
Set Clear Eligibility Criteria
Your agreement must explicitly state what conditions employees must meet so that they will receive their benefits, such as services to complete. By being clear, you’ll prevent ambiguity or misaligned expectations.
Navigate Non-Compete Clauses
If there are non-compete clauses already applied to the working relationship, you should consider removing them so that you won’t hamper the employee’s chances of getting a new job. If the non-compete agreement can’t be removed, you can negotiate it with the other party, such as by lowering its restrictions.
You can hire a lawyer to help you with these additional aspects of the agreement that can affect it. It’s also beneficial to negotiate terms with the other party so that the final agreement is balanced and fair.
Should You Hire a Lawyer for Retention Agreement Drafting?
A lawyer can help you in various ways when drafting a retention agreement, as they have the legal expertise and experience to protect your interests.
They can assist you in various ways when drafting your agreement, such as by:
- Confirming legal compliance. They’ll align all agreement terms with the relevant laws and regulations. This is especially important so that you don’t encounter hidden risks or repayment obligations of which you weren’t aware.
- Drafting clear and enforceable terms. They’ll define the retention period, eligibility requirements, and payment dates for clarity.
- Identifying potential disputes. They’ll consider any terms that could result in disagreements and include provisions in the agreement to protect your interests.
- Coordinating the agreement with other documents. They’ll ensure that the agreement is consistent with all other relevant documents, such as employee contracts and company policies.
- Reviewing your agreement. If you’ve already drafted a retention agreement, you should hire a lawyer to provide an in-depth review of your contract so that it’s clear and specific.
Where to Find and Hire a Lawyer to Draft Your Retention Agreement
If you need to hire a qualified lawyer to draft your retention agreement, you don’t have to reach out to local lawyers in your area. Instead, you can find a reputable and reliable lawyer by using an online legal platform such as ContractsCounsel.
ContractsCounsel is one of the largest online legal marketplaces that connects you to lawyers who are professional and skilled. All lawyers are vetted on the platform and have contract drafting experience.
To request that a lawyer on the ContractsCounsel platform drafts your retention agreement, here are the steps to follow:
- Go to the ContractsCounsel marketplace.
- Select ‘One-time project’ and ‘Create or update contract.’ If you’d prefer to ask a lawyer to review your contract, choose ‘Review contract.’
- Post your project, which is free to do. Include information about what you need so you can connect with the most suitable lawyers for your project.
- Wait for bids. You’ll receive multiple bids from lawyers directly on the platform who are experienced to help you. This makes the process of finding a lawyer much more convenient because they’ll reach out to you.
- Review the platform’s lawyer data. Go through extensive lawyer information, such as the lawyers’ location, field of expertise, years of experience, credentials, and client ratings they’ve received for previous projects completed on the platform.
- Select a lawyer and hire them to draft or review your retention agreement for a flat fee.
