What Makes An Employment Contract Void?

When an employment contract is void it means it was unenforceable from the moment it was created. In other words, if an employment contract or a part of a contract is void, it never had any force or effect. If there is a clause in an employment contract that is void, then a court has a choice to void just that clause of the contract or void the whole contract.

How An Employment Contract Becomes Void

The law can void an employment contract for several reasons, including failure to comply with minimum employment standards, ambiguity, illegality or lack of perfection. Below is a description of all these various reasons why an employment contract could be void.

Failure To Comply With Minimum Standards

Primarily, an employment contract can become void when it does not comply with the minimum employment standards of a particular jurisdiction.

For example, if an employment contract contemplates a $10 hourly wage, but the minimum wage in the jurisdiction of that contract is $15 per hour, then the clause stipulating the $10 hourly wage is void.

A common clause that can become void in an employment contract because of failing to meet minimum employment standards is a termination clause that promises some deficient amount of notice of termination or severance.

Ambiguity

In addition, an employment contract can be void when it is ambiguous or vague. If there is a clause in the contract that could be in contradiction with local minimum employment standards, but it is not clear one way or the other, it could be void. For example, if a termination clause in an employment contract called for “at least one week’s notice of termination”, that could be void because it is not clear what that means, and it could be interpreted to mean that an employee was only entitled to one week of notice whereas local minimum employment standards would have required more notice depending on the jurisdiction and the seniority of the employee.

Illegality

Moreover, an employment contract can be void if it contains a clause that is illegal or against public policy. For example, if an employment contract has a non-competition clause, the contract may be void in some jurisdictions where the local legislature has prohibited such non-competition clauses.

No Perfection

Lastly, an employment contract could be void if it failed to ever have a key legal ingredient for forming a valid contract. All contracts, including employment contracts, require (1) an offer, (2) an acceptance and (3) consideration. Consideration means “something for something”, i.e., money in exchange for labor in the case of traditional employment. For example, in some cases where an employment contract was found to be void, the employer gave an existing employee a new contract to sign without any raise or cash bonus in exchange for signing it, thus failing the requirement of new “consideration”.