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Six employment contract clauses to check before you sign!

Congratulations on the new job…offer. Until you have returned a signed contract to your new employer or HR department, you’re still not yet locked into the role yet.

Most reasonable employers would have sent you the new letter of engagement with the fresh contract of employment (these days even electronically).

While most employers (try to) do the right thing by the employee, inadvertent mistakes are still made in the contract. Your employer may have told you things or made certain promises about your employment (bonuses, commissions, flexible work arrangements, etc), however unless they're contained in your employment contract, it could cause disputes later down the track. It always helps to not only check for (typographical errors) but more importantly, lookout for omissions from the contract compared to your understanding of the offer(s) made to you about the employment.

Your employer may have told you things or made certain promises about your employment ...

These are some of the things to look out for:

  1. Check your position description – contracts these days contain particulars of your employment conditions in the schedule (located at the rear of the contract). Take a close look as it will contain your rate of pay or annual salary, whether employment status (full-time, part-time, casual), whether your employment is a fixed term contract, etc. These terms should all reflect your understanding of the role. Be sure to also check the position description of your roles and responsibilities to ensure that it accurately reflects your understanding of what you will be spending most of your time doing in that role.

  2. Hours and place of work – Are there provisions for overtime work or is there a clause that states that you will be required to work “reasonable over-time” without compensation? Does your employer have multiple work-sites? If so, will a car be provided or are there any provision for car allowances? Is there also a clause that allows your employer to “reasonably direct” to move your place of employment to the other side of town, or even interstate? These are clauses that may have not been discussed at your interview but could end up as a surprise if you do not go through the contract thoroughly.

  3. Superannuation rate – many employers recycle the same employment contracts every year. While the bulk of the document is reusable, this presents a difficulty when industrial and taxation laws change. Many contracts we review still contain lower rates of superannuation than the legal requirement.

  4. Bonus’ and commission – Be sure to know when and how any bonus’ and/or commissions are paid. We have dealt with many cases involving the distribution of bonus’ and commissions that are discretionary or contingency based. There have also been disputes where client’s have missed out on their bonus’ purely due to the timing of their resignation.

  5. Probation and notice periods – Common probationary periods range between 3-6 months. It is also important to note that the notice period may be different during and outside of the probation period. This could be important for people who may be expecting 2-3 offers at the same time.

  6. Hidden clauses and omissions – While this will vary with every individual contract, we are confident that your contract will contain a clause to the effect of “this written agreement supersedes any prior verbal representations made to the employee”.  This means that if you were promised a Rolls Royce and a driver in the job interview and it was “accidentally” left out in your contract, you can be sure that you’ll continue to catch public transport to your work. If you discussed it, make sure its in the contract explicitly without any ambiguity.

This advice is not specific and we advise that you should still seek legal assistance to review an employment contract, particularly in cases where managerial roles, intellectual property, restraint period and other complex employment issues are involved.

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