Employment Contract – Things to consider and check out
Employment Contract is considered as a legal agreement between you and employer. A breach of that contract happens when any of you breaks the terms and conditions. Once you have accepted the job, there is a legally binding contract of employment between you and the employer and the law does not require witnesses or a signature to make it valid.
Before signing an employment contract, you should take into account the following things which are given below:
- Job security: Does the agreement really provide job security?
- Start and end dates: Does start date and end date covers satisfactory length? Working hours, entitlement of annual, sick, maternity, paternity leave and notice period issues.
- Cause for termination: Legal jargon has to be well understood because, you in no way wants the employer to have wide discretion in termination, if the term ‘sole discretion’ is used, it eliminates any possibility for discussion, notification or compromise in future.
- Talent Reward and Recognition comprise of negotiated salary, performance-based bonus and it’s criteria, other bonus (if any), whether benefits are guaranteed or changeable, health benefits, health insurance and travel expense reimbursements.
- Job description: Whether job title, roles and expectations are spelled out?
- Moonlighting: Make sure that the contract doesn’t prohibit you from doing more than one job (Example: Freelancer).
- Copyrights and inventions: Whether there is a chance that employer may claim to the fruits of your creative efforts, even if you labor on a side project off your employer’s premises.
- Noncompeting clause: Beware of signing any agreement that bars you from working for a competitor for a considerable period after separation.
- No solicitation of clients and employees: A close insight is required into post-employment restrictions on your ability to do business with people you have worked with during the contract period.
- Sale of employer: If the company is sold, does the employment contract terminate or remain in force?
- Restrictive clauses consists of non-competition, non-solicitation, non-dealing and non-
poaching clauses which may restrict you taking future jobs.
Being an employee, it is your prime responsibility to check all terms and conditions which meet your expectations and future safeguard prior to any contract signing.
However, an employment contract should include the following basic points:
- Job information includes job title, reporting department, supervisor and performance evaluation matrix.
- Compensation and benefits includes annual salary or hourly rate, annual increase, bonuses/incentives, medical benefits (proportion of staff contribution), 401(k) plan and any fringe benefits.
- Time off, sick days and vacation policy includes time off policy, paid vacation days accrued per pay period, expectations related to sick days, family emergencies or unpaid leave, make up hours by working after-hours and weekend events.
- Employee classification includes whether new hire is an employee or contractor to ensure tax and insurance compliance, also what distinguishes employees from contractors and classify employees correctly right from the beginning.
- The schedule and employment period includes whether employment is ongoing or for a set term, when to start work hours, whether working from home or remotely is allowed and if working nights and weekends are required.
- Confidentiality agreement includes maintaining privacy related to business trade secrets and client data by having the employee sign a confidentiality agreement within the contract. Instead of making this a separate contract or piece of paper, include it as a section of the employment contract and place a field in the section to be signed.
- Termination terms and conditions include clear indication about what is required for either party to terminate the relationship, including the amount of notice required and if it should be written.
- Severance or outplacement plan information: If necessity arises, is there any severance package or an outplacement plan?
- Requirements after termination includes whether the contract should include any
restrictions or mandates on an employee after leaving the organization.
An employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without incurring legal liability. Likewise, an employee is free to quit job at any time for any or no reason with no adverse legal consequences.
Another useful post from our friend Mahabub Sadik – HR manager
And we hope his post will help you with checking your new contract and be aware few important things.
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