Employment contracts explain the working relationship between the employee and the company in detail. This includes everything from payment and benefits to the job description.
While most employment contracts look the same, the details can be very different. Before signing an employment contract, you should be careful to understand exactly what you are agreeing to.
In this article, I will go through everything you need to know before signing an employment contract. That way you can be confident that you are making the right decision.
No matter the head count at your company, SignTime has you covered with this recent article detailing everything you need to know to draft employment contracts as well as links to helpful templates for use in every industry.
Four things to do before signing an employment contract
While employment contracts can look similar, they often have very different details. Given that these details are so important, it pays to take the time to understand them. Here are four things you should always do before signing an employment contract.
and understand the employment contract before you sign it
I’ll be the first to admit that I just scroll to the bottom and accept my iPhone’s terms of service (ToS). It might not be the best thing to do, but who has the time to read the ToS for a dozen different apps or devices that just get updated every three months?
While this probably won’t cause me any trouble, not reading an employment contract can certainly cause you issues. I once changed jobs after 102 weeks at a company, thinking that the leaving bonus was paid for every month of service after the first full year of seniority. Turns out it was monthly after the second full year. If I had known that before submitting the paperwork, I probably would have stuck it out for two more weeks!
An employment contract is a legal obligation, regardless of whether you read it or not, and whether you understand it or not. If you are allowed to wait a few days to sign it, consider reading it thoroughly and asking questions if you are confused about anything.
Get a copy of the agreement
Every employer should provide a copy of the employment contract. However, that might not always be the case. If they don’t give you one, be sure to ask for a copy. There may be times when you are confused about your job description, planned pay raises, holiday times, or other such matters. If you already have a copy of your employment contract, then you won’t need to potentially answer nosy questions when you ask for one later.
For example, when you are thinking about leaving a company, you might want to know about the vesting schedule of an employee investment match. If you are employed at-will, then this might be the time your employer terminates the contract early to recoup those benefits.
Find out if you can opt out of some clauses or updates
While everyone should have an employment contract, not every part of the contract is to the benefit of the employee. If you aren’t comfortable with certain parts of the contract, it is worth finding out if they are optional.
This is especially true for new agreements or updates that you might come across while working.
Look out for these red flags
Well-written employment contracts are to the benefit of both the employee and the employer. If that’s not the case, it might be a red flag that you should look for work elsewhere. Here are a couple of common red flags:
· Arbitration agreements that make the employee pay the full cost of arbitration or set deadlines that are shorter than those specified in legal statutes
· Non-compete agreements that are very long, geographically wide, or would essentially prevent you from working in your chosen field in the future
Questions to ask before signing an employment contract
Here are some general questions to ask yourself before signing an employment contract.
Will a noncompete clause limit my career choices after I leave?
Non-compete agreements (NCAs) restrict an employee from finding similar work in the future. Some jurisdictions have found these to be unfair and unenforceable. Others still allow NCAs, but there are strict limits. These limits can be summarized as follows:
· Duration: An NCA must be for a reasonable amount of time, for example, six months or one year.
· Geography: An NCA must only cover a small geographic area, for example, a neighborhood, city, or state.
· Scope: An NCA must be restricted to specific jobs or specific competitors.
Can an employment contract keep me from being fired for no reason at all?
Employment contracts might list standard at-will rules for termination. This means that you can quit or be fired without cause at any time. Note that, even with at-will employment, you have legal rights that cannot be violated, so being fired for discrimination or retaliation remains illegal.
With an employment contract, it is possible to negotiate specific conditions for dismissal, for example bad behavior or poor productivity, to give yourself more job security.
Are there employment contracts for independent contractors or consultants?
Yes, there are. In fact, I discuss freelance contracts at length in a separate article.
Sign an employment contract with confidence
The best employment contracts protect both the employer and the employee. However, it pays to take the time to read the agreement carefully and ask any questions you may have.
Once you understand what is being agreed to, you can be comfortable signing an employment contract.
Whether you employ one person or a thousand, SignTime is there to help. With convenient e-signature capabilities, new recruits will be able to return employment contracts wherever they are in the world.
With an easy-to-access and organized online contract repository, never search for important paperwork again.