Change of Control Clause Employment Agreement Example

A change of control clause is a critical component of any employment agreement that protects the interests of both employers and employees in the event of a corporate merger or acquisition. A change of control clause outlines the rights and obligations of both parties in the event of a change in company ownership.

To illustrate how this clause works in practice, let`s take a look at an example of a change of control clause in an employment agreement.

“Change of Control” Definition

A change of control is defined as any situation where the company experiences a change in ownership, such as a merger, acquisition, or sale of a significant portion of the company`s assets.

Employee Rights

In the event of a change of control, the employee has the right to terminate their employment within a specific time frame, typically 60-90 days. In this scenario, the employee will be entitled to severance pay equivalent to a specified number of months` salary, as well as any accrued benefits.

Another right of the employee is the right to continue their employment under the new ownership. This continuation may be subject to changes in salary, responsibilities, benefits, or other aspects of the employee`s employment agreement.

Employer Obligations

The employer has obligations under the change of control clause to ensure the employee`s rights are protected, regardless of whether the employee chooses to terminate their employment or remain with the company.

One of the employer`s obligations is to provide written notice of the change of control to the employee as soon as possible. This notice should outline the employee`s options and any changes to their employment agreement as a result of the change of control.

The employer may also be required to provide severance pay to employees who are terminated as a result of the change of control. The amount of severance pay will depend on the employee`s length of service, position, and other factors specified in the employment agreement.

Conclusion

In conclusion, a change of control clause is an essential component of any employment agreement. It provides employees with the necessary protection in the event of a corporate merger or acquisition and outlines the employer`s obligations to ensure employees` rights are protected. By including a change of control clause in your employment agreement, both parties can be confident that their interests are protected in the event of a change of ownership.