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California Cuisine Inc. Employment Agreement Case Study

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Updated: Jul 3rd, 2020

Introduction

The culture of impunity and malpractice in employment is almost being solved due to the amendments being done on the laws regarding employment agreements. In addition, workers and employers have formed various unions to ensure they champion for the rights of their clients through proposing policies that will protect their interests. This essay explores the argument presented through an employment agreement case study involving a company and sacked employee.

Definition

An employment agreement is a document that explains the terms and conditions that specify the relationship between workers and their employers. Even though, these documents differ depending with organisations they have basic requirements that must be observed.

Some of these include the nature of contract, compensations, witnesses, duties, benefits, termination and applicable laws amongst other provisions. A breach of contract means that one or both parties have failed to meet one or some of the requirements of the agreement, and this may lead to termination of the contract.

Case Study: Basic Information

Bill Beasley was employed by California Cuisine Inc. on July 24, 2011 and his contract was terminated five months later due to what the company termed improper behaviour. The company discovered that he had introduced a new concept that allowed clients to place their orders using their mobile phones or other mobile communication devices that were provided by the hostess.

This concept involved sending short messages to the relevant authorities, and the hotel staff would take the orders to the clients’ tables. The company terminated his employment contract because it claimed that he had breached their employment contract since he did not consider their opinion before developing and using the concept.

This led to a string of accusations from the company and Beasley as they tried to prove their innocence and how the other party breached the employment agreement. The company claimed to be compensated all the salary Beasley had been paid since the commencement of his employment while he demanded that the company should compensate him for wrongful termination.

The above events show that most people and organisations sign employment agreements without understanding the provisions that protect them and what they should do in case one party breaches the contract. It is necessary to explain that while these agreements aspire to promote a good relationship between an employer and employees it can also be misused and advance animosity between the two parties. The most common causes of conflicts regarding employment agreement arise due to the following two factors.

First, each party must read and agree to the terms and conditions that bind them before they sign the agreement form. This means that they must ask questions and seek clarifications regarding an issue that is not clear.

Therefore, by signing the agreement form it is assumed that both parties have agreed to be controlled by the terms and conditions stipulated by the agreement. This means that in case one party does not feel conformable with all or any of the requirements it should not sign the agreement; therefore, there will be no contract between them.

Secondly, the conflict may occur as a result of misunderstanding of one or more aspects involved in the agreement. This means that there may be differences in terms of the manner in which the employer and employee understood the contract. For instance, an employee may assume that since the agreement states that the job position involves managing employees the individual has a right to sack and employ other junior workers.

However, these rights may be reserved for the board of directors, but this may not be specified in the agreement form. Therefore, it will cause conflicts between these two parties since there will be no clear definition of the roles of the office holder involved in the agreement.

Even though, California Cuisine Inc. and Mr. Beasley present their argument claiming that they played their roles well and that the other party should compensate for the damages caused by termination of the contract it is necessary to evaluate all circumstances and legal considerations before making conclusions regarding the appropriateness of the compensations demanded by both parties. The following is an evaluation of the employment agreement form signed by the parties and a legal approach to the conflict between them.

First, it is necessary to understand the nature of the contract that connected these two parties. The company was undergoing a transition marked by an increase in its production activities; therefore it required an interim manager to serve as the president, secretary and chief financial officer. This means that Mr. Beasley was familiar with the management and administration of the company and that he understood he was supposed to be a temporary president for the coming six months.

In addition, they agreed on the possibilities of retaining him beyond the initial term even though this was to be evaluated later. Therefore, this explains that Mr. Beasley was on a short term contract that did not mature before it was terminated. However, there was no guarantee that he was to be employed later as a permanent president of the company.

Secondly, the agreement outlined a clear term of employment that specified the period within which the contract will be deemed viable. The contract noted that the employment commenced on July 24, 2011 and was expected to end on July 23, 2012. However, this section contradicts the earlier provision that the initial term of the contract was six months since this is the time that an interim president can serve.

Therefore, this agreement flawed its provision by way of contradictory statements. This means that it is not clear whether the contract was supposed to expire after six or twelve months. However, the law considers all interim positions to be filled and served within six months contrary to which subjects the employee to the full term of the contract. Therefore, Mr. Beasley is justified to demand a full compensation, for the term he was supposed to serve as the president of this company.

However, on the other hand, the agreement stipulates that this contract can be changed based on mutual agreement between the two parties. However, there is no evidence to prove that there was an agreement that declared the period of service to be six months.

In addition, the company states that the term of service can also be considered to be the time the employee served even if the person is terminated before the initial period expired. Therefore, it can justify this term by virtue of the breached contract by Mr. Beasley and refuse to give him his demands.

In addition, the employment agreement gave Mr. Beasley exclusive rights to do anything that will promote the interests of the business including supervising and managing the business, officers and affairs of this company. However, it also notes that the directors shall also guide the interim president in his duties. This means that even though he was the president of the company some decisions were very complicated and Mr. Beasley did not have the right to make them without consulting the board of directors.

In addition, it states that the services of the interim president shall be rendered when and as required by the board of directors and this means that there was he was supposed to seek approval from this department before adopting and implementing a new project. However, he did not consider their opinion before rendering the servers of the company obsolete.

The board was supposed to issue, directions, instruction and control weighty issues that affected the operations of this business. However, he bypassed their role and went ahead to introduce a new concept to the company without their approval. This was a total breach of the terms of service agreed by these two parties.

Thirdly, the company provides a base salary of $ 275,000 annually, and this includes an employee on contract, interim or permanent employee. However, Mr. Beasley was supposed to be paid the whole amount after the expiry of the contract, but since he served the company for five months only he was supposed to be paid what he worked for. On the other hand, he cannot claim bonuses since the company provides it to employees that have served their initial terms fully.

This means that for anyone to get the bonus the person must complete the initial term and continue to serve on the agreements made after the expiry of the first term. However, Mr. Beasley did not finish the first term; therefore, does not deserve this reward. Moreover, he is entitled to purchase an average of 20,000 shares since he is a beneficiary of the scheme. However, this is determined by the validity of the reasons presented to warrant his termination.

On the other hand, it is necessary to explain that the initial agreement and the provisions of the agreement cast a dark shadow on the applications of various considerations of employees like benefits and rewards. Even though, the company considered his decision to adopt a new technology an unwise move it still provides that he should use all powers within his abilities to ensure the company improves its performance. Therefore, there was no ground to sack Mr. Beasley because his actions were aimed at promoting efficiency in this business.

Therefore, he should be granted this benefit and enjoy his shares for the next three years after he is paid the salary for the initial contract. Even though, the company pays its top executives a three weeks vacation every year Mr. Beasley does not qualify for this since it is awarded at the end of the year. This is in accordance to the period an individual serves and not the traditional calendar. This means that he should have served the company for almost ten months to get this benefit.

Moreover, the company’s termination policy states that an executive can be sacked if the person fails to accomplish his duties and refuses to follow the directives issued by the board of directors. However, the case study shows that the directors did not give any direction regarding the use of communication devises.

Therefore, Mr. Beasley did not see any breach of contract when he introduced this concept. In addition, the contract states that the board must issue a notice and allow the respondent time to readdress the issue being discussed before taking any step.

However, he was not served any notice, warning, direction or guidance regarding his concept. The company failed to follow the procedure above and went a head to terminate his contract. He did not fail to perform his duties since there is no evidence that the technology affected the operations of the company. In addition, he did not refuse to follow any instruction, guideline or directive issued by the board of directors since none was issued to him.

Therefore, it breached its employment agreement and should pay Mr. Beasley for the losses he incurred. Secondly, he was not convicted of a felony, fraud or embezzlement of assets or funds from the company.

The fact that he was sacked because he introduced a new concept in the business did not stand any ground to prove that he committed a serious crime. His actions were aimed at improving the performance of the company and not selfish interests. There was no evidence that the communication devises used were acquired in a corrupt way or led to losses.

On the other hand, there are some aspects of the agreement that show Mr. Beasley breached the contract by failing to observe the requirements of his position. First, the employment contract form demands that, in case, an executive does not understand any part of the agreement he should consult the board of directors and seeks further clarifications.

He did not seek any help in interpreting the contents of this agreement. In addition, it allows the executives to discuss with their lawyers the provisions of the contract and decide whether they are comfortable with them or not. In this case, there is no evidence that such consultations were made.

This proves that he understood the contents of this document and was comfortable with them. There is a possibility that Mr. Beasley rushed to sign the papers without knowing what he was doing. For instance, his employment was supposed to last for six months according to the introductory part of the agreement.

However, another section of the same agreement stated that he was supposed to serve in the interim capacity for one year. These are conflicting statements contained in one document and shows that the company was not very keen when preparing the agreement. However, he is to blame for the mistake since he failed to identify such errors and signed the form without seeking clarifications.

In addition, Mr. Beasley had a brilliant idea that was supposed to help this company to improve its services. The introduction of modern technology in any business is a significant step toward improving the efficiency and quality of services or goods offered.

He used his skills, knowledge and experience to identify gaps that were supposed to be filled to ensure the business improves. He did not wait for anyone to direct him or propose some changes on how customers ordered their meals. He introduced mobile communication that was cheap, fast and reliable in terms of communicating with the hostess and other hotel staff.

It is necessary to explain that most employers would appreciate such creativity since it aims at promoting efficiency and attracting customers. However, the employment agreement demands that even if an employee develops a skill or idea the person must submit this right to the company and ensure that the directors are informed about what is going on in various departments.

The document provides that the executive must disclose and submit these ideas in writing to the board to ensure the company gets ownership rights of all ideas developed within its premises.

In addition, it is reasonable to argue that Beasley’s efforts to promote efficiency in this company can be suspicious due to the following reasons. First, he did not inform the board of directors that he was planning to adopt a new technology that will ensure customers place their orders using mobile phones or other communication devices provided buy the business.

This means that he ignored the role of directors in the company and went a head and gave himself powers to make such significant decisions without consulting them. This was a serious violation of the employment agreement that required him to inform the directors about any plans that affect the business.

Secondly, the mobile communication devices were purchased without the approval of relevant authorities. This is a big project that requires all stakeholders to be involved due to the financial implications involved. Thirdly, his idea led to the scrapping of the use of traditional servers in ordering for meals.

This can be considered to be an attempt to commit felony since it violates the traditional way of placing orders in this restaurant. The board of directors or other people may demand to know the reasons why these two concepts were not allowed to run simultaneously. Therefore, there are many questions surrounding this new idea and this may have forced the directors to terminate his contract.

Lastly, this company considered this action a breach of contract since Beasley was not responsible for implementing the changes regarding finance and technology. He was supposed to propose measures that can improve this company and not to adopt or implement them without consent from the directors.

Therefore, he went out of his jurisdiction and performed roles that were not assigned to him. This can be translated to mean conflict of interest that is motivated by other personal desires. The directors may have though that he is planning to overthrow their authority in the company and thus they were justified to sack him.

Conclusion

This case study shows that both parties played a significant role in breaching the employment agreement. Here were errors of omission and commission that affected their abilities to implement and follow the terms of service that connected them. However, Mr. Beasley should have a partial compensation for the losses he suffered due to premature termination of his employment.

He should also be allowed to purchase the shares offered by the company. However, he is not supposed to be given the bonus for the 2011 and 2012 fiscal years since he was on a short term contract. On the other hand, California Cuisine Inc. is not entitled to compensations from Beasley since he did not actively breach the employment agreement.

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IvyPanda. (2020, July 3). California Cuisine Inc. Employment Agreement. Retrieved from https://ivypanda.com/essays/employment-agreement/

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"California Cuisine Inc. Employment Agreement." IvyPanda, 3 July 2020, ivypanda.com/essays/employment-agreement/.

1. IvyPanda. "California Cuisine Inc. Employment Agreement." July 3, 2020. https://ivypanda.com/essays/employment-agreement/.


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IvyPanda. "California Cuisine Inc. Employment Agreement." July 3, 2020. https://ivypanda.com/essays/employment-agreement/.

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IvyPanda. 2020. "California Cuisine Inc. Employment Agreement." July 3, 2020. https://ivypanda.com/essays/employment-agreement/.

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IvyPanda. (2020) 'California Cuisine Inc. Employment Agreement'. 3 July.

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