Contracts from an employee’s viewpoint

In previous columns, we have looked at contractual issues from an employer’s point of view. But what about the position of an individual being given a standard form contract to sign?

Obviously, the scope of the job duties, pay and benefits are the key issues. So much so that it is recommended individuals ask for an offer letter to be produced at the onset of employment stating only these, together with the notice period. Anything else in a contract is usually to the benefit of the employer and not the employee. One would be looking for commitment as to bonuses, with clarity as to the level of provision of benefits such as share options, car, pension, medical insurance and other peripherals. Clauses giving general statements such as an individual is “eligible for”, or “may at the discretion of the company receive” are not helpful.

Other issues

What are the other issues employees should focus on? Clearly, the notice period is important. When an individual is giving up a good job to start elsewhere – particularly in these dotcom days – it is usually recommended to have a fixed-term period of employment, with a notice period following on thereafter, to give security. For example, it is common to see a fixed-term of six months to a year initially, with a notice period of three months on either side to follow. This ensures the individual is not left in the lurch if the job does not work out in the early stages. Employees should also see whether there is a garden leave clause and see how long they could be asked to sit at home. It is also useful, tactically, for an employee if there is no payment in lieu clause in the contract. This means that if the individual is asked to leave summarily, without justification, it would be a breach of contract.

The next most important issue for employees is what they are giving up. Clauses relating to intellectual property should be scrutinised to ensure they are not a blanket assignment of rights. Most importantly, employees should study any restrictions after the employment has finished. Is the employee trying to keep the individual out of the market place for a certain period? If so, payment should be sought. What are the restrictions on dealing and soliciting clients and potential clients? Are there any restrictions on poaching staff? The employee will be looking for as much flexibility as possible, since severe could put off a potential new employer, for fear of legal complications.

Often overlooked is the issue of contractual sick pay. How long is it guaranteed? Is there a gap before long-term disability benefits kick in?

Employees should also be wary of pre-conditions. It is usual to make employment subject to satisfactory references, medical information and confirmation of immigration status. Any other pre-conditions should be looked at carefully.

Finally, where negotiating complex agreements, the employee should consider whether the employer can pay for any legal advice required. If you don’t ask, you don’t get!

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