Contract at-will is an understanding between the employer & employee, where an employer can fire any employee with giving any reason.
At-will employees are those who don’t have signed any employment contract with the employer. This is a common practice in United States.
Employer does not have to give any justification, just cause or valid reason for firing the employee. This is because employer is not bounded by any employment contract.
The employees also have benefit of leaving the job any time by not giving any proper reason because he/she is also not bounded by any contract.
There is still an exception to guard employees which states that an employer cannot fire any employee on the basis of sex, caste, color or anyone engaged in whistleblowing because in these kind of dismissals employees are protected by federal and state (which varies state to state) laws against discrimination.
Employees at-will cannot claim for any kind of losses at the time of dismissal due to lack of any signed contract.
However, employees fired at-will without any just cause can go to court if the employer has made verbal claims for employment and it was the reason for acceptance of employment by the employee. For example, if the employer has made claims like “You will be promoted after this period of time if you will keep on working hard” or “Your job over here is secure if you will keep on performing well”.
Drawbacks of contract At-Will:
1. If the economy is not able to produce more number of jobs or employees don’t have option for alternate jobs, they are forced to work at-will to earn their bread. This situation can leads to coercion or sexual and mental exploitation.
2. The employees who are performing well but became target of employer due to resentment because of any reason can be asked to leave the company.
By looking at the above mentioned drawbacks, state and federal laws later come up with the conclusion that firing because of bad will could lead to payment of dismissal compensation by the employer to employees. There are certain statutory rights which protect employees from any kind of harassment or discrimination even if the employees are fired “at-will”.