Employment Contract

19 minute read

Disclaimer:

  • I am not an attorney, a lawyer or an advocate whatsoever, so seek the help of a professional on your case before signing anything.
  • I tried my best to be as anonymous as possible about the attributions and references in this article and I strongly deny any attributions.
  • *I try to be as fair and as informative as possible to both parties, and I take no responsibility on any of the views expressed in this article. *USE THEM AT YOUR OWN RISK!
  • Views expressed in this articles are solely those of the author.
  • Always try to seek clarification if you don’t understand a clause.

Introduction

There are, at least, two sides (or parties) to each employment contract. The employer who gives you an offer after careful consideration and the employee, that you are, who want to weigh your options and eventually negotiate, sign or reject the contract (or the offer) altogether.

So far, I haven’t seen any firm, sound and perfect employment contract. There are either some minor or major flaws. It seems that no professional have had any chance to review them. It sometimes seems epidemic to me to face contracts, which are flawed in their basic clauses.

Some of them try to use a friendly voice, some are aggressive and some are cryptic. Those who talk friendly are mostly the ones their offer is quickly accepted, since friendly manners can be seen in their legal documents. The aggressive ones are those who try to stop you from practicing your rights and try to be as strict as possible, which they can’t. The cryptics try to hide behind the misunderstood and misinterpreted laws, rules and regulations.

It seems like the employer and the employee are on different pages. In order to show them the light, I’ll try to explain how to approach a contract and how to eventually negotiate, sign or reject it. It’s a live document and I’ll try to update it as much as I learn more about the laws, rules and regulations.

An employment contract, “contract” from now on, is a set of terms, rules, conditions, laws and regulations which allows the employer and employee to know their rights and responsibilities and try to work together, as set in the contract. The contact is almost always bilateral, meaning both parties have responsibilities and obligations. This bilateral contract lets them seek the practice of law — and sometimes force in worst cases — to deal with issues arising from any party not conforming to the contract.

I presume that you have passed all the interviews, tests, on-site, off-site, online and everything else and you’ve been offered a contract, so you are thinking: “now what?”. What I am trying to do is to answer your “now what?” question.

A contract usually includes some or most of the following topics, which I will try to explain in greater detail hereafter. It is going to be a long text, which obviously I do recommend you to read, but otherwise just read the interesting parts. The first part is the terms of employments and in the second part I will explain the decision-making process.

Always be aware of the gray areas in the contract, since there are places where it is hard to decide what to do while something happens. Always try to ask for more information and clarification on those clauses, since this clarification would later help you be assured that you can do your job with no interruptions.

Throughout the article I try to give examples of a software developer contract, but the general terms apply to all employment contracts.

🗹 Terms of Employment

1. Employee Responsibilities or The Assignment

Usually this part includes information about the job responsibilities and how you should do the job. It is either brief like a sentence or two, or divided into multiple statements that try to clarify or include as much as possible. Sentences starting with “your initial responsibilities, but not limited to, …” are usual statements that, instead of clarification, try to include as much responsibility as possible and also account for future changes to your responsibilities. These types of statement are those you should be fully aware of, since when the description of your job or responsibility changes, you cannot deny it, because you already accepted it. Although this doesn’t limit you to do anything legal to take your rights back.

An example template of these statements would be like this:

We strive to give you the opportunity of grow and blah blah, but we reserve the right to change the terms whenever we see fit. Your initial responsibilities is/will be, but not limited to:

  1. To work in the team …
  2. To do this and that …
  3. To make sure everything is OK …

2. Reporting Structure

Some companies are hierarchical and some are flat, or so they say. In every possible organization, there will be a way to report to a higher authority on the matter. It would be your mentor, manager, leader, CTO, CEO or anyone else who is responsible and in charge for making sure that you are doing good and are happy with your job and task. They are the ones you should trust and try not to hide information from, even if you’ve made a mistake. Telling them that you’ve done something great or made a mistake, is the key to the prosperity of the whole company. Otherwise this debt will amass and would lead to losing the job or even the chance of company being dissolved.

Sometimes you’ll be assigned mentors to let you familiarize with the company, the projects and the team. These mentors are responsible for all of these and they usually are old members or employees of the company and are more senior.

3. Description of The Work

In this section, you will be brief about the description of your work, which usually is different than your responsibilities, which I have discussed above. Your responsibilities are general sentences that give you an idea of what the general vision for this role is, according to company’s vision of personal and corporate grow. This section is more detailed and is usually about the specifics of your job.

Usually these topics are discussed:

  • Start date: a strict or flexible start date, where you should, obviously, start your work.
  • Location of work: usually this is the company’s address or if your company has branches overseas or need you to travel, those places are usually mentioned here. Some companies try to make it as general as possible to make room for future branches to be included in your contract.
  • Hours of work: either strict or flexible timing is what you should take into consideration. This is sometimes negotiable to some extent, but not always. Strict work hours are the usual 9–5, and flexibility in timing usually depends on the type of the work.
  • Type of work: office-based, remote, work from home (WFH) are some possible combinations of types of works you can do to fulfill your responsibility. Office-based is the most obvious one, which you should “go to work” every single morning and usually come back in the evening. Remote and WFH jobs are those you either work from overseas or work from home. Usually a mix of these is also possible, in which, you come to work on certain days and you have the option to work from home on the others.
  • Relocation support: If you live far from the company you’ve applied for, they may try to help you move to the nearest location to the company’s office. Either the company’s human resources (HR) team handles the relocation or they seek the help of another relocation services company dedicated to help you with relocation, either with or without your family.
  • Visa sponsorship: people in certain countries need visas to to be able to travel and work in a foreign country. Some companies offer this and would help you along the process.
  • Work permit: along with the sponsorship of the visa, a work permit is usually needed to be accompanied by the visa, in order for the employee to be able to work legally for the company in a foreign country.

4. Background Check

Depending on the country and company, there would be a background check on your profile. This is what happens when you are going to work for high-profile companies or companies that are working in the security industry. This is not something secretive and the company must seek your permission to do this. Along with your offer of employment, you will be presented with another form to sign to give consent about it. The form should include everything they try to do to do background check, like the name of the security consultation company, what they look for and how they’ll perform this action. This is not something to worry about, unless you have something to hide. Be aware and prepared,since almost all your claims will be verified. These are usually checked: where you worked, who you worked with, your qualifications and certifications and all other related pieces of information.

5. Internship and Induction

Some companies have internship periods where you will be employed full- or part-time by the company afterwards. This is something that fresh-graduates are usually familiar with, since it is usually the case that they don’t have enough work experience, and they want to gain this experience, so they seek internship at big or small companies, either paid or otherwise.

For more experienced personnel, there will be an induction period, of three to six months, where they will be assessed by their contribution to the project(s), team and company or any other Key-Performance Indicators (KPIs). This is usually not the case for all and sometimes is the formality of the job or contract to include this statement. Usually the notice period for the induction period is much shorter, which I’ll talk about it in further topics.

6. Prohibition

Sometimes the company wants to legally prevent you from doing two or more businesses at the same time. This means that you cannot be employed full-time by two companies at the same time. Although they cannot stop you from doing this, but this has its own consequences. Some companies prevent you from doing any other type of business while you are employed by the company or even afterwards, which I’ll talk about it later. Although this seems unfair in some circumstances, it is there to ensure that you are fully focused on the company’s assignment(s).

You, as an employee, should be fully aware of this. Sometimes it is negotiable. For example, the company may accept the you study and work at the same time or you are working on an open-source project at the same time that usually does not take a lot of your time. So, be prepared to tell them what you do, besides your normal company hours. Since a mutual understanding and trust would later help your achieve great results.

7. Confidentiality

Company’s trade secrets are very important to the prosperity and growth of the company. So you should always be aware and careful not to share any trade secrets with anyone, especially on social media, where the outreach would be devastating to the company’s plans and future. Also, not everything is confidential, unless clearly stated in the contract, otherwise just ask your manager or mentor about it.

Statements would be like this:

All information obtained in the course of work with COMPANY-X shall be deemed to be strictly confidential.
No such information shall be divulged to any third party, or use for any purpose other than on the performance of your duties.

8. Non-Disclosure Agreement, a.k.a. NDA

Almost always, a NDA follows the main contract, which is a type of amendment or appendix to the main contract. NDA is a legal contract between parties in the contract that outlines the confidentiality of information, knowledge or material that is shared between the parties by the means of the contract. It goes on by defining different terms that apply to the sharing of these confidential trade secrets. As noted above, confidential information which are obtained from the company by any means by either parties, belong to the same company, unless the company explicitly confirms that it can be shared with third-parties. For example, you cannot share details of your tech-stack with the world, unless the company confirms it in writing that you can.

9. Non-Competition Clause

Sometimes companies can’t stand competition. So, they try to drag you into signing amendments or appendices called non-competition agreement. Sometimes it is written in main contract as the non-competition clause. This is to ensure that the other party, employee in this case, does not try to engage in any other similar business or trade that competes or is in direct contrast with the current one. Some see this as restrictive, others not. But as long as you try not to do the same exact thing with a competing business, you are good to go, although no one can stop you. I do recommend you to ask for clarification on any of the terms that you seem to be restrictive and limiting.

10. Ownership Agreements

When you start working for an employer, you should realize that you cannot use anything, including intellectual property, source code, documentation or otherwise, which has been created or produced at workplace for any other purpose than the job itself. That holds true, unless you have written permission from the company, that you can use it somewhere else, or make it open-source. This means that the company owns every single thing that is created on work-hours or even off. Sometimes it is hard to discern which is which, since you may create a similar piece of product on your spare time based on the ideas that are those of the company as a whole.

As a general piece of advice, do not try to use the company’s assets and properties for other means than the company’s interests, unless you know what you are doing or you have explicit written permission.

11. Employee Benefits and Perks

Usually each job at each company has its own set of benefits. The benefits range from housing, transportation, profit sharing and health and retirement benefits to entertainment in or outside the company. Each company has its own set of rules for this. The general rule is that at least some of them are provided by each company. These big and small incentives for the employees are “rewards” on top of the salary to improve employee retention in the company. Just keep in mind that some of these benefits are taxable in some countries.

12. Leave

During your employment, you are entitled by law to leave your job, while maintaining your status in the company. Each country and each company has their own set of laws and regulations. Generally you can have vacations, paid time off (PTO), holidays and other types of leaves, which you are usually paid. This is also negotiable to some extent.

There is another type of leave, called leave of absence, which is either requested by the employer or by the employee based on various grounds. They are also either paid or unpaid. The difference with the above mentioned leaves is that it is used for special circumstances, like active duty from reserve military personnel. This is not usually mentioned in the contract and is left for the law to decide.

13. Remote Work

As is described above, remote work has its own set of rules and practices. In this section of the contract, rules regarding remote work is outlined. As with every other types of work, it has its own set of potentials and drawbacks. Besides that, all the terms should be laid out clearly enough in order not to confuse either parties.

Generally, remote work is described as a type of work arrangement, in which the employee need not travel or commute to the workplace to do the job. There are two types of remote work. Remote work on specific days of the week (or month), in which the employee is permitted to work from home on certain days handle tasks and get the job done. On other days, they should be at the workplace to have meetings and synchronize with the team. The other type is the true remote work, in which the cost of travel, usually overseas, is unjustifiable or unreasonable for both parties. So the employer uses various types of remote communication tools to facilitate the job.

This topic probably needs its own article to be fully addressed, but as a whole, contracts for true remote work is different in many terms with normal contracts, since the employer usually need not provide extra benefits to the employee.

14. Tax

One of the most important and complicated topics of all contracts is tax. There are various taxes to be aware of. The most important one is the income tax, in which you pay some amount of your salary to your country’s tax office (the government). Usually the employer handles all tax deductions and payments, unless your country’s laws are different. The other type is social security contributions or payroll tax, with each country having its own set of laws and regulations, sometimes paid all by the employer and sometimes shared between the two.

You always should be aware of all the tax regulations of your country which are directly or indirectly related to you and try to seek consultation of a professional on this. Otherwise you’ll get into serious trouble on your tax clearance at the end of fiscal year.

15. Insurance

Insurances is very varied, but are usually in two categories: mandatory and voluntary. Mandatory insurances are those imposed on employers either by law or by unions’ agreements to help the employees in need. Since we are not always healthy and there are mishaps and illnesses. This mandatory type of insurance helps the employees and their family to benefit from public healthcare services. Some of them are for welfare of the society and some others are for pension, i.e. when you get old and retire. Usually all of these mandatory insurances are basic types of insurance. In order to increase the coverage of healthcare services to include private healthcare services and have bigger retirement payments and the like, you should have some form of private insurance. Some companies help with group private insurance(s), but I do recommend you to find your own health and life insurance, alongside that.

16. Salary Review and Bonuses

It usually happens that you are not happy with your job because you are not compensated well. So, this clause ensures that you have the right to negotiate higher amounts while working for the company. Some include it by default and some don’t. So it is up to you to request this to be included in your contract.

Over time and as the company makes profit, there will be bonuses divided between employees. Usually it is up to the company to decide if they want to pay it or not. If they decide to include such a clause in your contract, they try their best not to put any type of pressure on themselves to pay you any type of bonus and they make it look usually like a unilateral promise with no obligations.

17. Conflict of Interest and Dispute Resolution

Life is not all about fairies. Conflict of interest arises when the interest of oneself opposes the interest of others and vice versa. I recommend you to try not to go into those directions, when it is not necessary. If you do, then there are various ways to mitigate such conflicts, but the rule of thumb is not to give away your right to seek help of a professional and eventually seek practice of law, in case the tensions are heightened. There are various ways to resolve disputes and deal with conflict of interest, which is out of scope of this article.

18. Resignation and Notice Period

Sometimes you no longer want to work for the company, either you’ve found a new job or want to conquer new frontiers. In this case, you usually resign. You should give a letter of resignation to your employer, thank them about the opportunity they provided you and eventually address the matter of resignation. While resigning, you can not vanish into thin air afterwards. You should respect (the rules of) the contract in this case, too. Notice period is the amount of time you should give to your employer to be aware of your leave and to try to help you with off-boarding and other paperwork. Usually the duration of the notice period before and after induction period is different.

19. Termination

Sometimes it doesn’t work well between you and the employer and they want to terminate the contract. In this case you are either dismissed or laid off, which depends on the decision of the employer. Other times, the duration of contract is ended and they don’t want to extend it. The employer usually communicate in some way with the employees to let them know that the contract is over and they should leave. Although sometimes it becomes tough, especially when you have other responsibilities and family to take care of, but life is life and it waits for no one. So, keep up your high spirit and try to find your next exciting job and move on.

20. Amendments

Amendments or appendices are usually internal rules, NDA and other legal documents attached to the main contract. These amendments usually follow the contract and you should sign them, too. Almost always, each amendment has at least one reference in the main contract. So, when reviewing the contract, request accompanying documents, a.k.a. amendments, and review them, too. There are many details in the main contract and the amendments, so try to put enough time to review them and then decide what to do. Seeking the help of a professional is highly recommended, in case you don’t understand some parts of it. Googling about it is also good and would enlighten you even more.

🗹 The Decision

Three situation would occur after carefully reviewing the contract and its amendments:

1. Negotiate

You are not happy or are confused with one or more parts of the contract and you want to change it, like salary, benefits or other terms and conditions. Go forward and tell them that you want to negotiate and seek clarification on them. Don’t hesitate to negotiate, since losing an offer is better than having a bad contract.

2. Sign

If you’ve finally decided to sign, now is the best time to do it. Go thank them that they offered you this, and sign it. May you leave happily ever after.

3. Reject

You have chosen not to accept the offer or you may have been offered a more luxurious contract from another company. Go thank them that they offered you this, and kindly reject it. May you leave happily ever after.

Last but not least, I do highly appreciate your feedback on this article and would like to hear about it. Hope you enjoyed reading the article as much as I enjoyed writing it.

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