Defined

• Companies may decide to use an employment contract with a retention agreement to limit the turnover of essential personnel. These agreements will often require employees to work for a specific number of years prior to leaving the company.
  
  

Features

• Retention agreements may have specific terms for an employee to follow prior to leaving the company. While these are not specific employment contracts, the individual may need to give an advanced notice---more than the standard two weeks---prior to leaving. Individuals also may void severance packages by breaking retention agreements.
  
  

Considerations

• While retention agreements can help a company keep skilled individuals under employment, they also may restrict the company's ability to terminate employment. Companies with employees who cannot complete tasks in a timely manner or begin to drag operations down may find it difficult to remove these individuals from the company.