An employment contract may state the amount of liquidated damages to be paid if the contract is breached. Upon a party's breach, the other party will recover this amount of damages whether actual damages are more or less than the liquidated amount.
If the agreed-upon liquidated damage amount is unreasonable, the Court will hold the liquidated damage clause to be void as a penalty. If the Court declares the clause to be void, the employer would have to prove the actual damages.
Delaware Liquidated Damage Clause in Employment Contract Addressing Breach by Employee In Delaware, a liquidated damage clause is a provision commonly included in employment contracts to address potential breaches by an employee. These clauses serve to mitigate damages suffered by employers due to a breach of contract by an employee, ensuring fair compensation is provided. Such clauses are enforceable as long as they meet certain criteria outlined in Delaware law. The Delaware liquidated damage clause in an employment contract seeks to estimate the reasonable amount of damages that the employer is likely to suffer in the event of a breach by the employee. By specifying a predetermined sum, both parties can avoid the uncertainties and costs associated with litigation. Several types of Delaware liquidated damage clauses in employment contracts may be established depending on the specific situation: 1. Non-Compete Clause: This type of clause prohibits an employee from competing with the employer or engaging in similar employment within a specified geographical area and time frame. If the employee breaches this clause, a liquidated damage provision can be triggered to compensate the employer for potential losses resulting from competition. 2. Confidentiality Clause: A confidentiality clause requires an employee to maintain the confidentiality of sensitive business information or trade secrets during and after their employment. If an employee fails to uphold this obligation, the employer may include a liquidated damage provision to recover the expenses and damages incurred as a result of the breach. 3. Non-Solicitation Clause: A non-solicitation clause restricts an employee from soliciting the employer's clients, customers, or employees for a certain period after the termination of their employment contract. A liquidated damage clause can be included to compensate the employer for any potential harm caused by the employee's violation of this provision. It is important to note that while Delaware enforces liquidated damage clauses, they must still be reasonable and not intended to penalize the employee. To ensure enforceability, the liquidated damages should reflect a reasonable estimate of damages and not be excessive or act as a penalty. In conclusion, a Delaware liquidated damage clause in an employment contract addressing a breach by an employee serves as a provision to estimate and compensate for potential damages suffered by an employer. Non-compete, confidentiality, and non-solicitation clauses are common types of liquidated damage provisions used to address specific breaches. Employers should ensure that the liquidated damages are reasonable, fair, and are not designed to penalize the employee.
