Not necessarily, if the employee already had similar code outside work that no-one at the office was aware of or understood but for which the employee could demonstrate holding significant rights in some reasonable way.
There are all kinds of ways that situation, or even enough ambiguity that the situation is a possibility, can backfire legally for the company. The best result for the employer in such a case is likely to be undertaking a significant amount of costly legal work and winding up with all the rights. There are many plausible and much worse outcomes.
Laws should serve us first. Not corporate interests.
False dichotomy is false.
Seriously, I've taken on whole HR teams over this kind of issue, and I won. I've walked away from potentially lucrative positions because I got a bad vibe about how the employer viewed work/life balance or had a dubious term about it in the contract and didn't seem likely to agree to change it. I really am the guy who should be totally on your side in this debate. So if this situation doesn't even convince someone like me to side with the employee, probably either it's not as simple as you're making out or your position is one-sided beyond the point of being reasonable.
As we often claim here, the idea itself is worth little. It is the implementation of that idea that matters more. There are ways to ensure that the implementation belongs to the company. In software for instance, whatever has been committed to the company's version control belongs to the company.
> Contracts are two-sided deals... it seems fair to me that the person paying that money would expect clear rights to what they're paying for in return.
Sure, they get the code. That's it. If that brings down the company, maybe they should have had a better business model. We don't have to bend over backwards to ensure that companies make a profit. Another forward-thinking, responsible company (such as RedHat) can take their place.
Laws should serve us first. Not corporate interests.