10 Things to Know Before Signing an Employment Contract

10 Things to Know Before Signing an Employment Contract

After a long and gruelling recruitment process, reading through your employment contract might not be the most exciting prospect.

If you’re just starting out in the world of work, you may think it’s entirely unnecessary. If you’ve never had much need to refer to a contract so far in your career, you may think it’s just a waste of time.

But reading the fine print of your employment contract is a must. (Even if you think you’ve already reached an agreement with your employer on the key points.)

Understanding the legal jargon contracts are written in will help bring clarity to your rights and responsibilities – and any perks that come with the job.

Best case scenario, your contract never need be consulted again. But chances are at some point you will rely on it as the principle formal legal agreement between you and your employer.

Here are the 10 most important things you need to check before putting pen to paper.

1) Job title

This may not seem like something crucial, especially when first starting out, but it can prove to be.

Take care to ensure your job title best reflects the work you’ll be doing. This is important for representing yourself to external parties, your fellow colleagues, and to future employers too (it might be on your CV for the rest of your career).

Being given the wrong job title can have further reaching consequences than might be suspected. Negotiate this point if necessary, and be sure to know why you’re being given the title you’re offered.

2) Job description

Not all contracts contain a summary of the job description.

If your contract does feature one, ensure it is not too limited nor too expansive. An inaccurate job description might end up taking you down a path not agreed upon at interview.

If your contract doesn’t include a job description, make sure you are in no doubt as to the expectations around your role before signing.

3) Remuneration (salary and bonuses)

The first thing to do when checking this section is to make sure that the salary stated is the one you negotiated. You should also know how and when you will be paid.

Your contract should stipulate any additional incentives and perks such as paid bonuses, health benefits, travel expenses, and other reimbursements. It might also include the criteria where these will be given.

There are two types of bonuses – guaranteed and discretionary. A discretionary bonus is one where information about the bonus is not disclosed in advance.

4) Period of employment (start and end dates)

Both the start and end dates need to be clearly stated, unless the contract is a permanent one.

Your contract may stipulate a certain notice period you (and your employer) will have to give upon declaring that it’s time for you to leave the job (which is likely to change depending on how long you’ve been doing it).

If it doesn’t stipulate this, then it should state that local legal regulations will cover this issue. (You should always check the local employment law to ensure the details of the contract are within its scope).

5) Termination (leaving the job)

You may not be thinking about leaving yet, but that time will most likely come at some point.

Your contract should prepare for an orderly parting of ways by clearly stating the conditions around which the contract may be terminated by either party.

Read this section carefully and ask the HR department for clarification if you don’t understand the legal jargon. Before signing, make sure you know what the contract dictates regarding either you or your employer deciding to terminate your position before any given end date.

6) Working hours and place of work

Working hours should be stated, and will be in the form of a daily time period or “office hours” (say, 09:00-17:00), or a given number of hours per week you are expected to spend working.

Where your work should typically take place will also be stated.

Your contract may detail any flexible working practices – such as the right to work from home – that you are entitled to.

If your job is likely to involve overtime or work outside of normal hours, the rules governing this should be laid out, such as the overtime rate or convertible hours you can use in a “time off in lieu” system.

7) Holidays and sick leave

The points that should be clearly stated about holidays are:

  • How many days of vacation you are entitled to
  • When does the holiday year start
  • When you are expected to take your ‘main holiday’, or the bulk of your time off
  • Whether you can carry any days over to the next year (and how many)

While this is usually regulated by local employment law, your company may offer additional holiday or have some requirements regarding when your time off is used.

Sick leave may impact other areas of your agreement, such as termination, working hours and notice period. This is also subject to local law, but the process of informing your employer about your illness will often be stated in your contract too.

8) Pension

It is common for companies to offer a pension to all their employees (though this may depend on whether you are full-time and on a permanent deal).

Pension are sometimes offered as standard as part of your contract, but they may also be optional. Your contract should be clear about this, and about whether your pension contributions are taken directly from your salary (and how much this is). It should also clarify how much your employer is liable to contribute, and what aspects of the pension contribution are subject to tax.

9) Policies, restrictive clauses and rights (competition, confidentiality, and intellectual property)

Your company will most likely have detailed certain policies around behaviour, rights and proper conduct for you to consult and follow. Be sure to seek these policies out and, if necessary, read them in advance of signing.

Restrictive clauses often take effect after the termination of employment and are important for employers because they protect the business, its clients, and other employees. There are four types of these: non-competition, non-solicitation, non-dealing, and non-poaching clauses.

Knowing these terms and what they entail is important because they might restrict you when taking jobs in future:

  • Non-competition clauses may limit your ability to work for a competitor of your former employer
  • Non-solicitation clauses prevent you from poaching clients and suppliers of your former employer
  • Non-dealing clauses prevent former employees from dealing with former customers and suppliers
  • Non-poaching clauses prevent former employees from poaching former colleagues

Your contract will probably also address copyright issues, and may state who owns what you have “created” during your time there – the intellectual property. Your contract will ordinarily also put limits on what information can be shared by you with others outside the company.

Be careful to follow and take note of these rules once your contract takes effect.

10) Equipment

Depending on the nature of your role, the company should commit to putting equipment at your disposal to facilitate you in carrying out your tasks – such as a computer, phone, or other devices and tools.

This commitment should be stipulated in your contract. If it isn’t, seek assurances for what equipment you are entitled to. Your responsibilties regarding this equipment should be outlined in the agreement between you and your employer.

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