11 things to look out for, before signing your next job contract
The elation of receiving a job offer should not cloud your responsibility to undertake due diligence. You may feel excited about being offered a new job, especially if it’s your first step in your career, or a move to a larger company. It’s understandable. Just don’t let your excitement blind you to the details in your contract. Take a couple of deep breaths and read your job contract carefully.
It is critical that you look out for the details in your contract. Confirm that the details match what was discussed during the interview, for example. It’s also important to take a long view. You may think exit restrictions or benefits like parental leave aren’t important now, but life can change very quickly and it’s good to know about both your benefits and responsibilities.
Typically, you have a short window before you need to sign your contract. Don’t rush – if you’re unfamiliar with the labour laws of the state or country you’re in, it may be prudent to have an attorney or lawyer go through it with you. This could potentially save you a lot of stress later on.
We’ve put together a list of things you should look out for in your next job contract. Consider this a starting point. Don’t be afraid to clarify anything you don’t understand. You also have the right to ask for changes to the contract, although your bargaining power will depend on your career to date and experience. Let’s get started.
- Job title and job description
It’s critical to confirm the scope of responsibilities of the role you’ve been offered. If the details of the role were discussed during the interview process, ensure the contract details reflect these discussions.
It’s important to understand what you will be held responsible for. It also allows you to delineate what is not your area of responsibility. In some jurisdictions, the job advertisement and other written communications from the company can be considered part of the contract. Keep all documentation from the company in a file along with your contract. The information may prove helpful if things turn sour later on. If the role description is too vague you may find yourself being forced to take on more than you agreed or imagined. Don’t hesitate to ask clarifying questions. It may also be useful to find out about the working culture of the company, to see if extra unpaid work (overtime, for example) is the norm.
- Restrictive clauses/covenants
This section on your contract may not be relevant to you right now, or even during your time at the company. All the same, it is a valuable exercise to go through the details here carefully. If you decide to move on from the job, you may face restrictions about who you can work for, or work with for a period of time. Don’t let this discourage you from building contacts throughout your career – just be aware of the conditions governing those relationships.
- Non-compete clause: this may prevent you from working for a competitor or starting a competing business,
- Non-solicitation: these restrictions focus on preventing you from poaching customers from the existing company,
- Non-dealing: a clause like this can restrict you from working with former colleagues or B2B partners for a period of time,
- Non-poaching: commonly, you may not entice colleagues away from the company to hire them yourself for a period of time.
Generally, these conditions must be considered ‘reasonable’ to be enforced by law. That means you may face typical restrictive conditions like these for around 3-24 months after you leave the company (depending on the specific situation and state/country legislation).
- Contract start/end dates, and possible delays
Confirm that the commencement date of your contract matches what was agreed on. This is particularly important if you’re to be paid by the day – if the date is later than you discussed, you could miss out on wages. Check also that the length of the contract is accurate. If you have agreed to work for a certain length of time, ensure it has been written clearly. If you can, have the start and end dates specified, rather than listing a period of time.
Some jobs require background clearances to be attained before starting work. If you already have the necessary checks this is unlikely to delay your start date. If you need to get them, this could prevent you from starting in line with your contract. Clarify this before you sign the papers.
Before signing the job contract, check that the listed salary matches the figures discussed during the interview process. If you have negotiated a new salary or different benefits than stated, you must confirm these changes. Included non-salary benefits like a company car, health insurance or pension/superannuation payments should also be specified. Any conditions relating to commissions, share options or bonuses should also be specified in detail. If there are payments to be based on performance, ensure the contract outlines who decides if targets have been met, and how those decisions are made.
- Taxation implications
There are often specific taxation implications when signing a new contract. The responsibilities will be influenced by your situation, for example, if you are working as an independent contractor, your tax details will be different from a salaried worker. Ensure your role is outlined explicitly for taxation purposes, so you can make informed decisions. Having incorrect tax information can lead to large liabilities, so it’s worth consulting an accountant if you are unsure.
In the UK most of the public-sector contracts come under IR35, so it is important to check that this has been disclosed and the implications have been discussed with you. It is vital as there are higher tax implications.
- Leave entitlements
Never assume that leave entitlements are in place, or standardised across your industry. Depending on your location, there may be minimum legislated leave entitlements. Check your contract for the following:
- How many annual leave days can you take per year?
- When does the holiday calendar year begin? When you start work may impact how much leave you can access.
- Do you have paid or unpaid sick/personal leave days? How many?
- Do leave days roll over each year or do they expire if unused?
- Are accrued leave entitlements able to be cashed out at the end of the contract?
- Are there restrictions around when you can take leave? Sometimes company-wide leave is enforced, or certain black-out periods apply when no-one can take leave.
Further to these leave suggestions, keep in mind that your life situation may change over time. You may be free to concentrate solely on your job now, but personal life priorities can develop relatively quickly. Forming relationships and having children are common changes. Does the contract allow for parental leave? Can you opt to take time off to have a baby or be with your child after the birth? Will your job be there when you want to return to work? Maternity and paternity leave entitlements can vary greatly dependent on the jurisdiction and the size of the company.
- Working hours and location
You may have a different understanding of expressions such as ‘full time’ or ‘part time’. Clarify with your potential employer about how many hours per week are expected.
- Will you have regular set hours or a rotating roster?
- Check if early starts, late finishes or weekend work are required.
- Is overtime expected? Is it paid or unpaid?
- Are penalty rates applicable?
- Are you required to work on public holidays?
- Is time in lieu applicable? (Where overtime is recorded and traded for a day off at a later time).
Does your company have more than one office? Check to see if you are expected to work from one place or required to report at different locations within a geographical area. Find out if working remotely (‘from home’) is applicable to your new role. If travel is a part of the job, investigate if a fuel allowance is payable, or if a company car will be provided.
- Job security
It might be unpleasant to think about, but you must consider the termination clauses in your contract. How can your contract be ended? Some employers are allowed by law to terminate ‘at will’ or with ‘sole discretion’, which means they are not required to consult with you before making a decision to let you go. Sometimes the law will dictate notice periods (unless a case of gross misconduct is reported). Examine your contract closely. Even if an end date is specified (and it should be), some contracts allow for earlier termination. If the wording seems ambiguous, confirm the details with an employment attorney/lawyer.
Also confirm what can happen if you decide to leave a job before your contracted end date. You may be required to give a specific period of notice, or agree to forfeit accrued benefits.
A lot of professionals have freelance work on the side these days. It is important to see if your contract allows for moonlighting if your work is in the same industry. Some companies frown upon this, particularly if it is in potential competition with them. If your additional work is in an unrelated field there should be less or no issue. In a similar vein, check for restrictions on intellectual property (for example, content creation, copyright, inventions). What will belong to you and what will belong to the company? If you are working on side projects at home, it may benefit you to disclose this so the intellectual property details can be excluded from the contract.
- Sale of employer
Another point of clarification: what happens if the company changes ownership? Contracts can become null and void, leaving you to renegotiate for your conditions with a new employer. Sometimes existing contracts are honoured, but it’s not guaranteed. This situation may appear unlikely, but it always pays to be aware of your position.
- Other restrictions
Check the contract for any other restrictions that may be placed on you. These points should be made clear during the hiring process but it’s important to be aware of small details. Some employers have strict data protection policies which means you may not take information outside of the office. Others (such as defence contractors and other sensitive employers) restrict employees from bringing mobile phones or cameras onto the premises. You will need to consider these restrictions if you have important reasons to be contacted at work (such as ill family, or the birth of a child).
It is always worth clarifying the details of the contract. It’s not offensive or inappropriate to do so. Go ahead and ask for more information if you need it. Don’t be afraid to take a couple of days to consider the details. Check with a qualified advisor, and your relevant labour laws. Taking the time to understand your contract should reduce the chance of a nasty surprise or a misunderstanding later on. You’ll be far more confident walking into your new job, and in a stronger position to negotiate when the time comes to renew your contract.
Comment by Mohamed Zakir
Excellent article and very useful information. Thanks for the wonderful post...
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