The LegalVision team often drafts employment contracts for small and medium business. We also review employment contracts for employees, both during the hiring phase and also once they’ve been terminated. We’ve used this experience to set out a list of the issues you should consider when reviewing an employment contract that a potential employer has provided. Use this article as a checklist, and if you’re unsure if any of the clauses in the employment contract are fair or reasonable, don’t hesitate to get in touch!
1. Type of Employment Contract
The first question you need to ask is whether you’re actually entering into an employment contract, or a contractors contract. A full-time or part-time employment contract gives you job security, whereas a contractors contract or a casual employment contract does not. If you’re not getting job security, you will want to be financially compensated for this.
2. Non-Compete Clause
One of the most common employment matters our network of lawyers deals with relate to the non-compete clause in an employment contract. A well drafted non-compete clause will essentially prevent you from working in a certain industry or location for a set amount of time post employment. Many employees either don’t bother reading the non-compete clause when signing their contract, or don’t worry about it altogether. This is a mistake. If your skills make you particularly valuable in a set industry, and you sign a non-compete which prevents you from working in it post-employment, you could find yourself without a job for a long period of time. If your employer insists on including a non-compete in the agreement, try to negotiate the length of the non-compete period down.
3. Non Solicitation
Another clause that commonly causes issues relates to non-solicitation. Employers will often build in a clause preventing their employees from asking for a job with a client or a competitor, or “stealing” a client. Obviously this sort of clause makes sense from the employer’s perspective, but it can lead to difficulties for the employee. Even if you haven’t actively solicited a client or a competitor, you could fall foul of a non-solicitation clause. Try and negotiate this clause out of the agreement if at all possible, or speak with a solicitor before signing.
4. IP Issues
Another common issue that causes disputes relates to the development of intellectual property “on the job”. This issue is one we see regularly in relation to software developers. It’s important that you’re very clear on whether or not your employer owns all the IP you’ve created during the course of your employment.
5. Pay, Overtime and Benefits
Australian employment law is a complex area of law. Many employees are governed by awards, whereas others are not. If you’re governed by an award, you can check what your rate of pay should be on the Fair Work Australia website. If you’re not governed by an award you will obviously be in a position to negotiate your salary. It’s also important to check that your employment contract refers to other government mandated benefits such as long service leave, annual leave, maternity leave and the like. Getting a specialist employment lawyer to complete a quick review of your agreement is a great idea.
6. Employee Handbook
Most employment contracts will refer back to the business’ employee handbook, which will set out issues such as what actions will lead to termination, what the rules of employment are, and so on. Make sure you ask for a copy of the handbook before signing the contract. Review the handbook and make sure its provisions are reasonable!
Many employees just sign the first draft of any employment contract put in front of them. If you’re working for a big business you will probably not have much negotiating leeway, but if a small business is hiring, then why not negotiate? The LegalVision team can help!