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.
Texas Liquidated Damage Clause in Employment Contract Addressing Breach by Employer The Texas liquidated damage clause in an employment contract addresses the breach of contract by an employer and outlines the consequences and remedies for such breaches. This clause is designed to protect employees' rights and ensure that they are compensated fairly for any contractual violations committed by their employers. The purpose of including a liquidated damage clause is to establish a predetermined amount of damages that will be awarded to the employee in case of a breach. This predetermined amount is agreed upon by both parties at the time of contract formation and serves as an estimate of the actual damages that may result from the breach. It is important to note that the enforceability of liquidated damage clauses in Texas depends on certain factors, such as whether the designated amount is reasonable and does not serve as a penalty. There are different types of liquidated damage clauses in employment contracts addressing breach by employers in Texas: 1. Fixed Amount Clause: This type of clause specifies a fixed amount of damages that the employer will owe the employee in case of a breach. For example, the clause may state that the employer will pay the employee $10,000 as liquidated damages if they fail to provide the agreed-upon compensation. 2. Calculation-based Clause: In this type of clause, the amount of liquidated damages is determined based on a specific formula or calculation. For instance, the clause may state that the employer will owe the employee three times their monthly salary as liquidated damages for each month of breach. 3. Unspecified Amount Clause: Some liquidated damage clauses may not specify the exact amount, but instead state that the damages awarded will be an amount determined by a court or arbitrator. This type of clause allows for flexibility in determining the appropriate damages based on the circumstances of the breach. It is crucial for both employers and employees to carefully review and negotiate the terms of the liquidated damage clause before signing an employment contract in Texas. Consultation with an attorney experienced in contractual matters is highly recommended ensuring that the clause is enforceable and provides adequate protection in case of a breach by the employer.
