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 employee would have to prove the actual damages.
The Pennsylvania Liquidated Damage Clause in an Employment Contract is a legal provision that addresses the consequences of a breach by the employer. This clause sets specific terms and conditions under which the employer can be held accountable for breaching the terms of the employment agreement, while also establishing the amount of damages that the employee may be entitled to receive. When it comes to Pennsylvania, there are two main types of Liquidated Damage Clauses that can be included in an employment contract addressing breach by the employer: 1. Fixed Liquidated Damages: This type of clause specifies a predetermined amount of damages that the employee will receive in case of a breach by the employer. The predetermined amount is usually based on a reasonable estimation of the actual damages that the employee might suffer as a result of the breach. This type of clause provides clarity and certainty to both parties involved and helps avoid lengthy legal battles over determining the appropriate compensation. 2. Unfixed Liquidated Damages: Unlike the fixed liquidated damages clause, this type of clause does not establish a specific amount of damages upfront. Instead, it allows the employee to seek compensation for the actual damages suffered as a result of the employer's breach. In such cases, the employee would need to provide evidence of the damages incurred, such as lost wages, benefits, or other financial losses. This type of clause provides more flexibility but often results in a higher burden of proof during legal proceedings. It is essential to note that the enforceability of a Liquidated Damage Clause in Pennsylvania depends on its reasonableness. Courts in Pennsylvania will consider factors like the nature of the employment, the type of breach, whether the damages were difficult to ascertain at the time of contract formation, and whether the amount stipulated is a reasonable estimate of the actual damages. Unreasonable or excessively punitive clauses may be deemed unenforceable. In conclusion, the Pennsylvania Liquidated Damage Clause in an Employment Contract Addressing Breach by Employer is a vital provision that protects employees' rights when an employer fails to fulfill their contractual obligations. Whether it is a fixed or unfixed liquidated damages clause, it serves to establish a fair and reasonable compensation mechanism, providing recourse to employees in cases of breach by the employer.
