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What is an implied business contract?

Most of the time, employment in New Jersey is at-will. This means that you or the employee may terminate the relationship at any time for any reason. Generally, you do not create an employment contract for most employees. However, there is something called an implied contract that you could put in place without even realizing it.

According to The Business Journals, you may create an implied employment contract by accident because it does not need to be in writing or even formally created. Generally, it occurs when you make some type of guarantee or promise. For example, if you tell a person during the hiring process that he or she will get pay raises each year, then this is a potential contract. You are making a promise and you must keep it.

You never want to guarantee or promise employees anything. This constitutes a contract. You want to keep your language general and put polices in place to help prevent the creation of an implied contract. Be careful when writing handbooks or whenever speaking to employees. If an employee perceives something as being a promise or a guarantee, then you are in bad territory.

Creating an implied contract means that you have to follow through. For example, if you tell employees in a meeting that they will not be laid off, but later, you lay them off, you could end up in trouble. You want to be honest with employees but be cautious with the words you use that could indicate a contract is being made. This information is for education and is not legal advice.

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