Five Trip-Ups To Look Out For In Your New Employment Contract
So you’ve nailed that tasty job offer – but are you ready to file the paperwork? Only fools disregard the power of the employment contract. Next time you review your terms and conditions, keep an eye out for the following trip-ups.
e.g. “The Company reserves the right to make reasonable changes to any of your terms and conditions of employment and will notify you in writing of such changes at the earliest opportunity.”
These nifty articles are designed to allow employers to alter the terms of your contract, giving them valuable wiggle room. The headache comes when they don’t need your consent to do so.
Signing on the dotted line in a contract with a flexibility clause can be construed as pre-agreement to any changes your boss wants to make. Problematic? You bet. You’re effectively allowing the company to dictate the terms of your employment with little reference to yourself.
Say the business hits a rough patch. Your boss wants to reduce your hours, but you’ve got a right to 40 hours’ paid work written into your contract. One glance at a flexibility clause, and hey presto! You’re now on a zero hours contract, obliged to work night shifts if you want to make any money at all.
It’s a far-fetched example, but not impossible. Ensure that any changes to your contract require your explicit agreement to become effective.
e.g. “You shall receive an annual bonus or commission payment of such amount as the Company may in its absolute discretion determine.”
There are two types of bonus: guaranteed and discretionary. The former is owed to you following the completion of a certain set of objectives. The latter is granted by your superiors as they please – obviously less than ideal, considering that ‘with the sole discretion of ‘x’’ is the biggest cop-out clause in contract law.
Many contracts require that employees be in full employment – i.e. not on notice period – in order to receive promised bonuses. This means that less scrupulous companies can lay off high-performing workers prior to the bonus season, thus avoiding shelling out the dosh. What’s more, they can use ‘payment in lieu of notice’ (PILON) to prevent workers working up to their bonus date, thus reducing company outlay, and denying you your hard-earned reward.
Even if PILON isn’t invoked, you could be forced to remain at your company by fear of losing a delayed but promised bonus payment. Don’t be caught out. Check your bonus conditions.
e.g “Your normal place of work is ‘x’, but the Company reserves the right to change this to any other branch or location from which it trades from time to time within the UK. You may be required to travel anywhere in the UK or abroad.”
If your new job involves extended travel, compensation should be written into the contract. Equally, if it’s a globe-trotting role, you’d do well to review any relocation articles. Moving countries costs time, money and psychological stamina; protect your interests.
Furthermore, if the company moves its office and expects you to continue work, what are your options? Businesses are constantly changing headquarters, sending employees abroad and making new travel demands. Make sure you know your rights if that one hour commute becomes five.
Inventions and ownership
e.g. “You acknowledge that all Intellectual Property Rights subsisting (or which in the future may subsist) in all materials or works produced by you either in the course of your employment or by using materials, tools or knowledge made available through your employment shall automatically on creation vest in the Company.”
What do you owe the company if you discover or invent something during your employment? Intellectual property isn’t the sole preserve of scientists and engineers; if you’re producing reports, marketing copy or brochures, you’re creating material, and thus likely to hold the IP rights for that piece of work.
Although an employment agreement itself is usually enough to prove a company ‘owns’ the IP rights for your creations, businesses often cover their tracks by inserting such clauses into your contract.
Now, usually these articles cover only work produced under the terms of your employment – in office hours, with office equipment, under the instruction of your managers, etc. But if you use your work computer to scribe that award-winning blog after-hours, your contract may entitle your employer to claim the rights to it. Similarly, if you create animations for your company daily, then go home and make similar ones in your spare time, IP clauses could let your boss claim ownership of that material too.
Ensure that any articles dealing with IP are as narrow as possible, allowing you to retain possession of your personal work. Otherwise, you might find your work re-appropriated.
e.g. “You are required to give a month’s notice in writing to terminate your employment. You are entitled to receive the same amount of notice from the company.”
A job is like a relationship – and, like any relationship, both sides must be free to terminate the arrangement at any time. Contracts lay down the terms under which employees may depart the workplace – and employers kick them out of it!
First, check your notice period. For a full-time employee, a notice period of one to three months is normal; anything shorter, and you could find yourself deprived of a job with minimum warning later down the line.
Secondly, go over the restrictions your employer places on your post-termination employment. Non-competition, non-solicitation, non-dealing and non-poaching clauses can be found in the majority of contracts. These seek to prevent employees from switching jobs and either taking others with them or providing valuable skills to competing businesses.
For example, your new contract might specify that you cannot work for the company’s direct competitor for 12 months following cessation of your employment with them. But what if you’re offered a juicy new position, with better pay and benefits, with your CEO’s prime rival? If you’ve signed a contract to the above effect, kiss that role goodbye. You have to pass.
It’s true that the law generally dislikes ‘restraint of trade’; there’s only so far bosses can go with controlling your movements post-employment. But the above stipulations are perfectly legal – if you agree to them in contract form. Take care and be aware of what you’re promising.
Susanna Quirke writes for Inspiring Interns, a graduate recruitment agency which specialises in sourcing candidates for internships and giving out graduate careers advice. To hire graduates or browse graduate jobs London, visit their website.