4 Harmful Terms in Your Employment Contract

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Written by Seun Oyediran

4 Harmful Terms to Watch Out for in Your Employment Contract

It is always a thrill to sign an employment contract, especially if you have been in the job market and sent out multiple job applications. However, the pile of paperwork, dotted lines, and text to read through is so much that most employees skip the read time for the signature. Well, before you think of signing the line, wait!

As of 2018, independent contractors made up 6% of the workforce, which is the largest employer of labor on the job market. Whether you are signing a contract for a private, public, or government establishment, phrases like zero hours, non-compete, confidentiality agreement, termination clause, no-hire, non-disclosure are crucial legal jargons that pop up in between the line that most people omit. These phrases, clauses, and words can limit your progress, restrict growth, and even make you forfeit your creative power if you decide to leave in the future. While these clauses look like roadblocks, they are often used by companies to protect themselves and their property against any future employee’s rage. So if you are signing the dotted lines, it would be nice to read through the contract or have your lawyer read through else it will be too late to salvage your dignity on your way out.

Why are these clauses in an employment contract?

Employment contracts are the most important binding document between employees and employers. The most valuable for the employers too, yet many employees nonchalantly ignore the contents within the contract because of the excitement of getting a job after many job applications.

Companies and good businesses know the impact and competitive edge the marketplace can cause an employee to leave. Hence there is the need for clauses to protect and safeguard their business, property, and good employees against future eventualities. Clauses such as those listed above will protect the company from the competition but also ensures that crucial information or intellectual property stays secret even if the employee leaves the company tomorrow.

So before you sign the contract, it is important to understand the restrictive clauses and have powerful negotiating skills. You can only have the best only before you sign the lines.

Employment Contracts – What Is It?

There is always a contract between an employer and employee even if you didn’t sign one – it is good to sign one though. This document describes the relationship and condition agreed upon by both parties. Although the law favors the employers more, things can take a turn if the employee leaves. It is vital to keep the relationship productive and profitable, but also great to know the employment and labor laws too.

Aside from detailing the responsibility of both parties, according to the Employment Act No.75 of 1997, the act also aims to establish the basic conditions for employment, including wages, dispute resolution, dismissal, leave, work hours, employee safety, and protection.

Other details in an employment contract are

  • The job description – employers must explain and clarify the job requirements to prevent employee anger and a lawsuit in the future. Employees must also ensure that the description is not vague or misleading and demand more explanation if any area is not clear or detailed enough.
  • Terms and conditions – most people NEVER read the terms and conditions in a contract, but you should never omit them. Now, this is where you see what is contained in the contract and also understand the mechanism and responsibility of the job. If the conditions do not fit your job application, this is the time to ask questions.
  • Compensation – let’s discuss money! This is the most crucial part of any employment contract. It contains a lot of clauses you should pay attention to when reading through performance expectations, benefits, and non-compete agreements.

Dangerous terms to watch out for in an employment contract.

The Restrictive Covenant

As simple as this clause seems, it has a lot attached to it. This clause allows businesses to protect themselves against the competition and the employee if you become the competition. This clause includes noncompete, nondisclosure, confidentiality, and non-solicitation clause. These clauses are becoming a common term in employment contracts and aimed at restricting the employee’s ability to opt for another job or start a business after resigning or quitting with the company.

The nonsolicitation clause prevents the employee from dealing with people or companies that are competing directly or indirectly with the company after they leave. The non-solicitation clause also stops the employee from working with vendors, partners, or supplies of their former company for a stipulated time frame. If you intend to sign the contract despite this clause, it is better to negotiate for a shorter no-hire time frame or decline the offer for your own good.

Unrealistic and Unobtainable Key Performance Metrics

This is a HUGE term in any employment contract. Most companies set standards and goals that are clearly unobtainable and while most job applicants never see this condition, it can lead to sack letters and even lawsuits. However, to prevent yourself from been caught in the trap of unrealistic expectations, you should get yourself acquainted with the Fair Labor Standard Acts that protects the employee from vague expectation but also against unlawfully terminating their jobs due to underperformance. The key performance metrics clause  expects that employees must meet up with their targets and the consequences of not meeting their targets. The possible penalty for flaunting this clause is disciplinary action, suspension without pay, and/or termination of the contract.

Ownership, Invention Agreement, and Intellectual Property Clause

For many businesses and companies, the fear of the competition is the beginning of wisdom. This clause takes particular aim at manufacturing and invention companies. The clause protects the companies from losing any of their intellectual property if they lose the employee that designed the project. If you sign an agreement with this clause, remember that you cannot disclose, take your invention or share your invention with another outside the current workforce if you leave. In fact, this clause takes total control and authority over all your inventions and intellectual property.

However, some companies would likely offer a joint intellectual assignment clause in the agreement. This allows you to have a stake in the profit and also receive acknowledgment for using your ideas and intellectual property. It does still emphasize the fact that you cannot take it to the competition even if you leave in the future.

Termination or Cancelation Clause

You must be wondering why this clause is significant in an employment contract. With the advancement in technology and innovation, it is very easy for employers and employees to walk out of a contract with ease. However, to protect both parties, the termination clause is added in every employment contract. The termination clause allows either party to terminate their working relationship with or without notice. However, attached to this clause are consequences for opting out before the due date? Actions can be left without pay, fines, and a lack of benefits.

While the clause seems to support the employer, it also helps the employee is they have been unduly laid off or fired due to a breach resulting from the employer’s fault or accident at work.

Finally, employment contracts contain lots of restrictive clauses and terms, the four above are the strictest and often ones that can limit your ability to grow in a company or out of it. As important as this piece of paper is to the employers, as an employee, you should ensure it is well-read and does not limit or tie you down at a spot.

NEVER be in a hurry to sign an employment contract without properly reading or comprehending what is written. Your life could be put on hold for a few minutes of ignoring the texts in a contract.

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