What is the meaning of:
A simple definition of “indemnify” is “to protect from risks.”
In the employment context, the word “indemnify” usually arises in (a) written employment agreements, or (b) when an employee takes on a role or a function that leads to extra or special risk of liability.
For example, if an employee of a company is asked to become the sole officer and director of a small subsidiary with little or no assets, which will likely engage in a particularly risky endeavor or investment, the employee should ask the parent company – which has plenty of resources – to indemnify her or him for any exposure to possible lawsuits, including both (i) legal defense costs and (ii) any resulting jury verdicts.
In the larger business context, when two or three companies work together on large projects – such as in operating offshore oil drilling rigs or creating new pharmaceuticals – we see indemnification agreements all the time.
The wise employee will be aware of potentially “risky” situations arising in his or her employment, and will not be shy about requesting “indemnification.” After all, any “rewards” you gain can be lost – and then some – by the “risks” all around you.
We offer a Model Letter Requesting Indemnification for a significant risk at work. To obtain a copy for your adaptation and use, just [click here].
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