I hired an employee, and since we were not able to agree upon a salary, we agreed that he would do the work and we would reach an agreement at a later point. After he finished the job we agreed upon a salary but did not formalize our agreement with a kinyan.

Q: Is such an oral agreement binding, or can either one of us renege on our agreement?

A: It is clear that when an employer agrees to pay an employee a certain amount, the employer is obligated to pay that amount even if they did not make a kinyan. The question that arises in your circumstance is that you did not agree upon a salary before your employee started working, and thus the question is whether an agreement that is reached after the termination of the employment requires a kinyan to be binding. On the one hand, since a kinyan was not made to solidify the agreement, perhaps it is not binding. On the other hand, since before the term of employment began, the two of you agreed to set an amount in the future, the subsequent agreement is merely the culmination of the original agreement and it should be considered comparable to an agreement made before the term of employment commenced.

A similar question was debated concerning a sale of part of a forest where the parties agreed that the buyer would determine which trees are included in the sale at some future date. According to some authorities, once the buyer chooses his trees neither party can renege, since that choice completes the original sale (Beis Shlomo I, C.M. 74). Others disagree and cite precedent from earlier authorities (Teshuvas HaRosh 89:2), who ruled in a similar circumstance that a transaction that was to be completed at a later date is not binding when a decision is made at that later date if the agreement was not formalized with a kinyan (Minchas Pitim 331:3; see Mishpetei Hachoshen 331, p. 23).

Furthermore, there is a general debate concerning the effectiveness of a kinyan performed with the condition that some part of the transaction will be determined at a future date. There is a school of thought that maintains that such an agreement is not considered a kinyan since breirah (retroactive clarification) cannot be used to complete an agreement (see Nesivos 61:3, 301:8; Divrei Chaim, C.M. 2:24-25; Maharsham 1:51; and Pischei Choshen, Kinyanim 13[94]).

Accordingly, in your circumstance it is advisable to perform a kinyan or draft a document that contains language of admission or a binding agreement (see Beis Shlomo, C.M. 3).

It is worthwhile to conclude with the Chofetz Chaim’s advice (Sfas Tamim, ch. 5) to employers to agree upon a salary beforehand since not doing so places one at risk for violating numerous prohibitions such as theft or withholding an employee’s wages.