Categorized | Job Hunting

The Employment Contract: What first-time jobseekers need to know

Posted on 19 November 2008

Congratulations! You just accepted the job of your dreams with the most dynamic company in your field. Before you adorn your desk with a picture of your beloved Siamese or participate in your first water cooler conversation, you may be asked to sign an employment contract. Employment contracts used to be reserved for high-level employees–presidents, vice presidents, directors, etc. But now, almost everyone is asked to sign on the dotted line before clocking in.

The employment contract trend may have begun as a result of the information age. Information, especially in high-tech companies, is the most valued commodity. The leaking of confidential information would be detrimental to company business strategy and, by extension, the business itself. Therefore, more and more companies have instituted an employment contract policy to prevent this. Even today’s top non-tech organizations are following suit.

What Is an Employment Contract?
An employment contract is a legally binding document that specifies the terms of employment between the company and the employee. In addition to outlining salary and benefits, most employee contracts also include confidentiality clauses to ensure that workers do not share confidential company information. Employment contracts are usually signed before the employer begins employment with the company, or on the first day of the job.

Employers want to ensure that former employees do not use confidential company information to assist competitors.

Employers want to ensure that former employees do not use confidential company information to assist competitors. To protect themselves, employers often include non-compete agreements in the employment contract. These agreements prevent someone from competing with the business both during and after their employment. Many stipulate that employees are prohibited from working for a competitor for a certain period, usually 12-18 months, after leaving the employer.

Do Employment Contracts Protect Employers?
Actually, yes and no. The employment contract protects both the employee and the employer. In addition to non-compete agreements and confidentiality clauses, most employment contracts include details about bonuses, stock options (if the company is public), vacations, and even severance packages–all quite important to the employee.

Contracts may also include important information about the terms and conditions surrounding termination. The contract will specifically disclose the grounds for termination, such as revealing confidential information, outright theft, or non-productivity. Most employers include the termination clause to avoid legal issues that may arise regarding an employee’s departure from the company.

Are There Different Types of Contracts?
Yes. Some employers chose to enter into “Employee at-Will” contracts. Under these types of agreements, the employer has the right to terminate the employee whenever they want, as long as no outright discrimination is involved. “Employee at-Will” contracts are not necessarily written agreements. In fact, even employees who do not sign a formal contract are often considered to be de facto “at-will employees.” Keep in mind, however, that some employees without written contracts will be asked to sign non-compete and confidentiality agreements.

What About the Legal Stuff?
Whether you have signed a formal employment contract or are an at-will employee, it is critical that you completely understand your rights and benefits. Do not be afraid to ask questions. In fact, the more questions you ask, the better. What happens if you are terminated? What if you become pregnant? Is there a severance package? Can you be transferred out of state? And, if so, will you be compensated for the moving costs? When does your contract expire? What happens if the company is bought or merges? It is important to ask these questions and others–even if you are not signing a formal contract.

If you have a lawyer, you may want to consider having them look over your contract. The company surely had their lawyers go over it with a fine-toothed comb. So, before you shake hands with your new boss, make sure you know exactly what you are shaking on. You will no doubt be excited about your new employment and career opportunity. Just keep in mind that you should always be aware of your rights and responsibilities as an employee. Save your headaches for the morning after that first office happy hour!

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1 Comments For This Post

  1. Resume Tips says:

    Very true: “even employees who do not sign a formal contract are often considered to be de facto “at-will employees.” And employment termination goes both ways. The employee can terminate his own employment at any time. A two-week notice (on either side) is actually a courtesy.

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