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Why do I want auto-renew in my employment agreement?

Provided by:  Jennifer Kirschenbaum, Esq.

July 18, 2017

 

Question: 

Hi Jennifer,

We discussed adding auto-renew to my employment contract instead of a specific term, but can you go over again why we should ask for that? 

Thanks, Dr. K

 
Answer:

Having our contracts locked down for the duration of our employment is pretty important, assuming your contract is comprehensive and contains protections for you.  For instance, for many of us working on incentive compensation structures, our contracts have terms discussing reporting obligations of the employer, reconciliation requirements, as well as other protections and benefits we are offered.  Sometimes when a certain term elapses it is because the parties just forgot the time has expired and have not renegotiated, and sometimes the lapse is intentional on one party's part.  Either way, having an expired contract leaves ambiguity in the relationship, and oftentimes will not benefit the employee.  If you think you are being cheeky and escaping a non compete or other restrictive covenant by allowing a term to lapse without renewal - thing again!  A court is just as likely to state the contract, in fact, continued, protections and all, if challenged.  You are better off dealing with terms head on and renegotiating if you have a certain term, or in the alternative, at the start of the relationship build in performance reviews and and assessments, and possibly metrics for advancement at the start, and look for an auto renew provision to escape ambiguity. 

Happy to discuss further offline.  


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