Considerations in Employment Termination

Alongside various means of bonding employees with the company, in both employment contracts and the company's procedures, attention should also be paid to the potential termination of the relationship between the company and the employee. For instance, various employment contracts often address the issue of non-competition. Any restrictions on competition have to take into account the laws of the state in which the agreement is applied, with respect to restrictions on employees' freedom of employment. Some states in the United States impose various conditions on the validity of various occupational restrictions.

Similarly, many employment contracts address the use which employees can make of the professional know-how they accumulated while working for the company. It is often only in legal suits against former employees that a discussion is conducted with respect to various distinctions between know-how pertaining to the industry in general (which is ostensibly the employee's property, even if it was acquired while working for the company) and know-how that is unique to the company and is a trade secret of the company (for further discussion of employment relations in the context of trade secrets, see Chapter 5 on trade secret laws).

Finally, many contracts address the options to which the employee will be entitled after leaving the startup. In many cases, employees are entitled to exercise the options that would have vested had they waited for the next vesting "milepost," even after leaving the company.