A contract can be defined as an agreement between two or more people to create mutual obligations that are enforceable by law. It is an agreement to do something and not to do other things. It is an expressly written agreement between two parties that is legally binding. In normal parlance, a lot of people make promises which can be referred to as contracts, but they do not know that those contracts are legally binding and can be enforceable by law. Many people fail to understand the legal implications of various agreements they have made or entered into. The contract can also be regarded as the document containing those agreements and the terms of the agreement. A contract entails that the parties involved are expected to fulfill a promise made to each other party, and there must be completion of a promise made by either of the parties. An example of a contract is employment contracts, lease agreements, insurance agreements, and financial agreements.
The focus of this article is the employment contract. An employment contract is an agreement between an employer and an employee whereby the employee is expected to perform certain tasks and functions while the employer remunerates the employee in return. An employment contract is a fundamental part of the employment relationship. This contract is issued by the employer to the employee to include the terms and conditions of employment. However, a type of employment contract can be permanent, fixed-term, casual, or zero-hour. In addition, before signing an employment contract, you must understand the importance of signing such a document. An employment contract helps to protect the interests and rights of the employer and employee. It also establishes clear guidelines for the duties and responsibilities expected of each party to the agreement, preventing any formal conflict from arising. The employment contract becomes binding after it has been signed by both parties. It is of great importance to read through the contract carefully and to think about the terms carefully before commencing employment.
These are the 7 things you should know before signing an employment contract. They include:
1.Identity: Either as an employer or employee, you must fully identify the other party in the employment contract. An employer must get the basic details of the employee, which include full name, address, age, and other information, and vice versa. Identify the place of work too. The location where you will be working as started in the contract is different from what you saw in the job posting. You must determine whether the workplace location(s) in a single day or foreign trips meet your expectations. If you have agreed to work in a vast geographical area, for instance, different offices, areas in the country or even abroad, your company will be in a robust position if you object to a transfer at a later stage. The contract must reflect information about the company before you proceed to sign it. Also, identify if your rights to a redundancy fee will be adversely affected if you refuse to work in a new location, having earlier agreed in your contract to do so.
2. Job Title and Description: An employer should expressly state the job title, the scope of the work, the duties and roles attached to the job title, and the full description of the job that is offered to the employee. The employee is also expected to clearly read and understand the roles, duties, and obligations attached to the position he or she has been offered. Before you proceed to sign a contract as an employee, ensure you understand the obligations to be performed and completed by you during the course of the work. Some employers refer to the same job internally and externally, such that after a person applies for a job and interviews for a particular position, they’ll be shocked to see something else in the employment agreement. Ensure the job title reflects the role you are taking and the description. In a situation whereby the job title is vague, make sure you clarify this with your employer. Ensure the job title matches the description in the original job posting that made you apply. Knowing and understanding the job title and description will help you determine that the job title, department, and job scope are the same as your expectations. Make sure your job title accurately reflects the role you will be performing, as this will help you represent yourself to coworkers and potential employers. For instance, if the role is for a managerial position, you won’t want the job title to simply state "executive".Ensure the contract is not too limited or too broad as it will create a problem during the course of the job. It can lead to doing things you can’t or don’t want to do, which means you will have to deal with a heavier workload than expected. You don’t want to shoot yourself in the leg with a broad and expansive job title and description, which can be altered by the employer because it is broad in nature. A change in job title and description might not seem like a big deal, but it can affect your wage, salary, benefits, and responsibilities after signing the contract. In a situation whereby you notice your employer has a different expectation of you, kindly state your concerns and get clarification before you proceed to sign the contract.
3.Salary, Remuneration, Benefits, and Bonuses: As an employee, before you proceed to sign an employment contract, you must be sure that the salary stated is exactly what you agreed to during negotiation and that the salary is worth it by calculating your gross revenue. Pay and net pay so that at least you have a reasonable amount at the end of each month. Read through the benefits available to you as an employee, be it health benefits, retirement contributions and pension plans, health insurance, life insurance, disability insurance, paid medical leave, wellness program, amongst others. In addition, clarify the conditions to be fulfilled to have full access to those benefits. Also check the type of bonus you are entitled to. Maybe it is clearly stated in the contract or not. It could be an annual bonus, signing bonus, discretionary bonus, retention bonus, referral bonus, holiday bonus, profit-sharing bonus, and commission. Make sure the payment structure is expressly stated so you are aware of when and how you will be paid.
4. Effective date, probation period, and working hours -The contract effective date is the date agreed by both the employer and employee for beginning the period of performance under the contract. Ensure you are aware of the probation period and the legalities of the probation period, which the employer will use to decide if you are suitable for the job. As an employee, use the probation period to determine if the company is appropriate for you. Be aware of how long the probationary term is and what you get if you complete it. Ask questions if the terms of full-time employment after probation are subject to dates, or if they are subject to a review with your manager.Read through the contract to confirm your working hours and working days and make sure it is as agreed so that you won’t end up working more than you are contractually obliged to. In situations of overtime, you need to clarify if you will be compensated or not. Make sure the policies guiding flexible working are in the contract. Do not make the mistake of agreeing to working hours you aren’t satisfied with to your detriment.Every employee's worst nightmare is long working hours. Clarify How many hours are required, how many are "anticipated," and how many hours can you work from a different location, such as home or elsewhere. The contract should also specify if the work is permanent, temporary, part-time or full-time as well as the specified hours an employee must resume work every day, be it 9am to 5pm. Breaks in between working hours should be included in the contract.
5. Termination- Most employees tend to ignore the aspect of the employment contract that deals with termination because they just got the job. They will be wondering why they should think about the termination of a job they just got. Ensure you read this section carefully and clarify anything you don’t understand. The contract should cater to a proper process of termination by expressly stating the conditions that may warrant the termination of employment by either party. Before you sign, be sure you understand what the contract says about you or your employer terminating your employment before the expiration date. Termination can occur for a variety of reasons. Therefore, make sure you know what is expected of you and what acts (or inactions) could lead to your dismissal. Some companies, for instance, may be happy with you freelancing on the side, while others may view any freelance work as a conflict of interest and dismiss you immediately. Also, if it's a contract role, find out your formal end date or project completion date.Termination terms must be specified. Otherwise, you risk agreeing to your dismissal at any moment, without warning, and for no apparent reason. This is referred to as "without cause." There may be a variety of legal phrases to learn in order to get the appropriate meaning. As an example, The term "sole discretion" refers to your employer's ability to fire you without first consulting you. The conditions and circumstances under which either party can terminate the employer-employee relationship, as well as the notice needed by each side, should be explicitly defined.
6.Holiday pay and sick leave - Many employers provide at least two weeks of vacation per year, while others require employees to accumulate vacation and sick time as they work. Beyond the wide variety of days you can take for depart, you should recognize the important points around carrying over depart days, phrases around paying these out if you have been to leave, and whether or not there are any restrictions in regards to departing at certain instances of the year. If you can't take vacation trips at the time of your choosing, that is, you are restricted as to when you can take them, this has to be addressed with your employer. Before signing the contract, take a look at the range of days and hours allotted as your vacation period. You want to consider whether or not there are different barriers around holidays. Some companies typically request that vacation days be used during a positive time of the year. For contract-based employees, you may not be entitled to any advantages or have to depart from your employer. The company hiring you will solely pay you the agreed-upon wages for your job. You have to check your phrases around getting paid all through vacation trips and ailing leaves.The factors that have to be simply referred to about vacation trips are: how many days of holiday you are entitled to; when does the vacation year start; when you are predicted to take your ‘main holiday’, or the bulk of your time off; whether you can carry any days over to the subsequent 12 months and how many. While this is normally regulated by means of neighborhood employment law, your organization might also provide extra vacation or have some needs involved when your time off is used.Sick leave may also have an impact on other aspects of your contract, such as termination, working hours, and be aware period. This is additionally concerning local law, but the manner of informing your business enterprise about your sickness will frequently be referred to in your contract too.You'll want to test the vacation entitlement, when it runs from and to, and if you can roll over any hours to the subsequent year. Your contract ought to additionally inform you if there are any restrictions on vacations-for example, some organizations insist on hours being saved and used between Christmas and New Year, or they would possibly no longer allow vacation trips at certain instances of the year. Most corporations will have a cap on the wide variety of hours you can take off at one time, and many will insist on annual go-away hours being spread throughout the year with time taken off in every quarter. Sick leave is normally a violation of local law, but the procedure for informing your company is frequently outlined in your contract.
7. Restrictive provisions— Restrictive clauses are also called restrictive covenants. These clauses are not applicable until after the termination of your employment contract. This is a very important aspect of employment contracts that people tend to overlook when signing a new contract due to the fact that they are solely applicable after you have left. But future job possibilities or enterprise improvement will be hindered if they are too restrictive, specifically if you are anticipated to switch customers with you to your new employer. The regular covenants are trying to stop you from poaching clients, or working for a competitor for a duration of time after you have left (typically three to six months, but they can be longer). Any non-public purchasers or clients you introduce to your new business enterprise can also end up built-in into your employer’s very own patron base and shape phase of your restrictive covenants when you leave, unless your contract says otherwise. Restrictive clauses may deal with confidentiality and intellectual property rights (non-disclosure, non-circumvention). The purpose of this clause in an employment contract is to prevent an employee from taking an action that could potentially cause harm to the employer. It is very necessary that you get familiar with the stipulated phrases before signing the contract. Restrictive covenants are typically designed to shield the employer's business, employees, and clients.
There are four types of restrictive covenants, namely, non-competition, non-solicitation, non-dealing, and non-poaching clauses. So if there are any restrictive clauses, have a look at them and apprehend what they are for.
Non-competition clauses might also restrict you from working for a competitor of your former employer.
Non-solicitation clauses prevent you from poaching your former employer's customers and suppliers.
Non-dealing clauses stop former personnel from dealing with former clients and suppliers.
Non-poaching clauses forestall former personnel from poaching former colleagues.
You must consider whether or not this area defines the sectors, types of businesses, and geographical barriers in which you may be working.You want to make certain that restrictive covenants don't seem to be negatively impacting your future job opportunities. For instance, you would possibly be prohibited from working for a competitor agency for a certain duration.
Conclusion
In conclusion, you have to recognize the different types of contracts before you decide to sign your employment contract. If you have read everything carefully and you understand, ask for a copy of the agreement. If there are terms in the contracture that are broad, ask for clarification or if you can opt out. Check for release of claims. Also find out what happens when there is a breach of the employment contract by any of the parties.
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