Whenever an employer hires an employee to do a particular work, an employment contract is usually signed between them. However, some people did not realise the importance of the employment contract in the professional world. Therefore, it is important for the employer and the employee to review the contract properly before signing it.

What Is an Employment Contract?

An employment contract is an agreement that is signed between an employee and an employer. It defines the working relationship between the employer and the employee. It helps to understand the rights and obligations of each party so that the parties can have better clarity with respect to the terms and conditions of the employment.  

What Clauses Should Be Diligently Reviewed in The Employment Contract

Employment contracts are legally binding in the court of law and you can face consequences for the breach of contract. Hence, there are various clauses that need to be reviewed before signing the contract-

1. Job description: There should be a clear job description written in the contract so that the employees are not confused regarding what is expected of them. Generally, a company may desire a vague job description but most employees want an exhaustive one. Without a comprehensive document outlining your duties, an employer gets a lot of leeway making you do the work which you have not signed for. Therefore, always be sure to ask for clarification if there are any areas in which you are confused.

2. Term: If there is a term on the contract (for example 3 years), it is vital to know the specifics of the term. In addition to this, the grounds for termination should also be known in advance of the contract’s expiration. We must also have a strong understanding of the conditions available for extending the contract (if present).

3. Restrictive covenants: Businesses often attempt to protect their ideas and client details through restrictive covenants such as non-compete clauses, non-solicitation clauses and confidentiality clauses. There are also survivability clauses which make some clauses enforceable even after the termination of the contract. These clauses are extremely important as they restrict an employee’s ability to work or start their own business in the same industry for a period of time after their employment term ends. Always review the compensation that will be provided for you during the restrictive term. It is not advisable and logical to take a position where you would be unable to work for a long time after leaving the job if the firm does not provide compensation during that time.

4. Compensation: This is the most critical aspect of any employment contract. A compensation plan does not just refer to salary or quarterly payments. It also may include bonus structures, and a profit-sharing plan that could be tied to performance and commission structures. Ensure that any additional compensation, such as bonuses and equity awards or ESOPs are outlined clearly. You should know what performance measures are necessary to trigger the additional compensation. Hence, it should be written as clearly as possible. Do not be gullible and accept an answer like “We’ll figure it out through the course of your employment.”  

CONCLUSION

It is great to receive a job offer but It’s important not to get caught up in the initial joy and rush to sign the document. You should definitely request time to review and consider the contract before signing. You don’t have to agree to all of the terms and conditions without thoroughly understanding them. You can also get outside legal help to understand these terms. 

HOW BEST LEGAL SERVICES CAN HELP EMPLOYEE AND EMPLOYERS?

‘Best Legal Services’ (www.bestlegalservices.in) helps their clients to fully understand the terms and the legal implication they’re getting into before signing the contract.  We also helps the employer protect his business by making the contract airtight. A clearly written contract that can be understood by a layman is far better than a contract full of jargon. Our firm conducts its due diligence and tailor-made employment contracts depending upon the working relationship of every employer and employee.