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.
A liquidated damage clause is an essential component of an employment contract in Georgia that addresses breaches by employees. It is a provision that outlines the predetermined amount of damages to be paid by the employee in the event of a contract violation. In Georgia, there are different types of liquidated damage clauses that can be included in an employment contract to address breaches by employees. These clauses are designed to protect employers from potential financial losses caused by the breach and provide a clear framework for resolving such breaches. Here are some prominent types: 1. Specific Monetary Penalty Clause: This clause specifies an exact amount of money that the employee agrees to pay if they breach the terms of their employment contract. The predetermined monetary value serves as compensation for the employer's losses and functions as a deterrent against potential breaches. 2. Forfeiture of Benefits Clause: This type of clause allows the employer to withhold or forfeit certain benefits or privileges promised to the employee in the event of a breach. It may include benefits such as bonuses, stock options, or other perks that the employee would have otherwise received. 3. Non-Compete Agreement Clause: A non-compete agreement limits an employee's ability to work for a competitor or start a competing business for a certain period after termination. In the case of breach, this clause may specify liquidated damages, typically a fixed monetary amount, which the employee must pay if they violate the non-compete agreement. 4. Confidentiality and Intellectual Property Clause: This type of liquidated damage clause applies when an employee breaches obligations related to the protection of confidential information or intellectual property. The clause may outline a specific amount of damages to be paid by the employee if they disclose or misuse proprietary information. It is important to note that liquidated damage clauses must meet certain criteria established by Georgia law to be enforceable. These criteria include ensuring that the predetermined damages are reasonable and proportionate to the potential harm caused by the breach. Courts in Georgia have the authority to strike down a liquidated damage clause if it is deemed excessive or punitive rather than compensatory. Employers in Georgia have the flexibility to include one or more of these types of liquidated damage clauses in their employment contracts to protect their rights and interests in the event of an employee breach. However, it is crucial to consult with legal professionals experienced in Georgia employment law to ensure that the clauses are drafted accurately and comply with all relevant regulations.
