What To Look Out For In Your Employment Contract
In an economy when jobs are difficult to come by, you may be too overwhelmed at just hearing the words “Congratulations, you’re hired!” that you just sign all the paperwork given to you to make the employment official. No matter how valuable the job is, however, it can be detrimental to your present and future career if you don’t take the time to read the fine print. Your employment contract spells out everything about your employment with that company. In case something goes wrong and you want to sever the ties with this particular employer, the contents of your employment contract are going to dictate even your next career moves. This is why you should know what it is that you are getting into before you affix your signature on these documents.
When scrutinizing your employment contract, these are the things that you should be on the lookout for:
The compensation and benefits package is specific and is what you had previously agreed upon.
When your employer first offered you the position, there was most likely a mention about how much your salary is going to be, what your benefits are and if you are going to receive bonuses. The verbal discussion about your compensation package was most likely the reason why you agreed to their offer in the first place so you should check thoroughly if this verbal agreement was reflected in the contract. As far as bonuses are concerned, some companies give guaranteed bonuses while others base it on performance. See to it that the terms for these are spelled out in the agreement as well. You also want to check if the contract spells out the benefits and if these are also guaranteed.
See to it that you can’t be terminated just for any reason.
If you intend to be locked into a job for a certain amount of time, you should see to it that the official start and end dates are clearly stated in the contract. More importantly, you should check the contents of the termination agreement. See to it that the language does not give your employer a wide berth to fire you at any time for any reason. If you must be fired, see to it that the termination is for just cause. Also, you should make sure that the language used in the contract is clear about your fixed term appointment. For example, if you have agreed to be employed with the company for a period of three years, you should make sure that this is really fixed and that they cannot just terminate you after giving you advance notice of one or two months.
In addition, you also need to determine what the severance package is and the things that can disqualify you from receiving it. Most of the time, an employee will not get severance pay if he is terminated for just cause. But what exactly comprises “just cause”? This is why these conditions must be spelled out clearly in your employment contract. Again, it would be to your advantage to narrow down these conditions as much as possible.
Make sure that your role and the responsibilities associated with it are clearly stated in the contract.
You want to see your job title plainly written down in the agreement as well as the tasks and responsibilities that you expect to fulfill while you are employed with the company. This way, you don’t miss out on any of the things they expect you to do and can’t accuse you of not doing work which isn’t part of your job description in the first place.
Watch out for the noncompete clause.
The noncompete clause is that portion in your contract which states that you won’t be able to work for any company that competes with the present company you are working for when you leave the latter in the future. Firms include noncompete clauses in their contract to ensure that workers don’t bring confidential information with them to their competitors. Unfortunately for the unsuspecting employee who does not read closely, very general terms in the noncompete clause can prevent them from working for another firm should they leave. Thus, you should see to it that the noncompete clause is specific as to geographical area of the competitors that you won’t be able to work for. Moreover, you should also see to it that the noncompete clause will only be effective up to a particular time period, say a year, after you are separated from the company.
Protect the original inventions that you were working on before you signed up with your employer.
Generally speaking, your employer can lay claim to all the inventions you make while you are working for them. This holds even if what you are working on is outside of work hours. If you already have some projects brewing even before you signed up with them, you should declare these in your contract so that you can effectively delineate what belongs to you and those that belong to the company.
Get the specifics on the non-solicit and no-hire clauses.
The non-solicit clause prevent you from pirating former colleagues or clients after you have moved to another company while the no-hire clause stops you from hiring those who have worked for the competition. These clauses could prevent you from working with the best people in your former company or may even limit your prospects. Thus, you should see to it that the terms of these clauses are not general but are spelled out in detail as well.
Ask what becomes of the contract in the event that the company gets sold.
Mergers and acquisitions are common in the business world. You may want to know what happens to your contract in case another company acquires your employer. Ask if your old contract is the one that will continue to be enforced or if it will be terminated by the new owner and you will be asked to sign a new one. If it’s the latter, do make sure to give it the same thorough review as your former contract.