Contact Us

Have You Read Your Employment Contract?

Stop. Put that pen down. Have you even read that contract you are about to sign?

You might be surprised to learn employment contracts do not have to be written down. (Are you reminded of the great film producer Samuel Goldwyn’s observation: “A verbal contract isn’t worth the paper it is written on”?) However, if an employment contract lasts for a month or longer, the employer must give the employee a ‘written statement of employment particulars’. This document is not the employment contract but includes the main conditions of employment, such as a description of the work involved, the start date and how much the employee will be paid. The employment contract, on the other hand, sets out an employee’s employment conditions, rights, responsibilities and duties.

28 February 2017
Image News

Not all elements of an employment contract are legally binding and the legal parts are called ‘terms’. An employer should make clear which parts of a contract are legally binding.

Before signing a contract put forward by a potential employer, consider the following points:

  • Read the contract. “Well, of course I’d do that,” you say contemptuously. But have you ever actually read your current employment contract? Can you even remember when or where you last saw that very important document? In real life, who reads small print, even though we all know we should? The truth is we are often so excited by the job offer, and so eager to look enthusiastic in front of our new bosses, we sign unread employment contracts without question. Understandable? Yes. Wise? No.
  • Not all work requires an employment contract. Agreeing, for example, to decorate someone’s house is a ‘contract to provide services’ not an employment contract.
  • What seems unimportant now might be critical one day. You might think you’ll never leave the fantastic job you have just been offered but, when the reality fails to live up to your expectations, restrictions on your freedom to go and work for a competitor could be disastrous. Yes, it’s awkward to talk about leaving to work for rival Company Y before you have even accepted the job with Company X, but if you agree to prohibitive terms now, trying to change those terms as you resign in a few years’ time will probably be very difficult indeed. Restraints on working for competitors are neither uncommon nor necessarily unreasonable but protect your long-term interests.
  • ‘Implied terms’ are points which have not been directly addressed in an employment contract but are, put bluntly, obvious. Implied terms might therefore include the fact the employee should not steal from the employer; the fact the employee should hold a valid driving licence for a job that involves driving; and the fact the employer should provide a safe working environment.
  • Be wary of a clause asserting you can be dismissed from your position on grounds of ill health. Are you sure you want to casually agree to losing your job if, through no fault of your own, you become too unwell to work?
  • Asking to change the terms of your proposed contract is increasingly common, particularly for senior positions, but don’t look difficult by questioning every clause.
  • Employers and employees must adhere to the terms of the employment contract until that contract ends (for example, if the employee resigns or is fired) or until those terms are formally changed, ordinarily through agreement between the employer and employee.
  • Why not ask an employment lawyer to look through the contract for you? After all, would you necessarily notice a clause that looked reasonable at first glance but might actually be damaging to you one day?