When you’re hired for a job, you’ll usually need to sign an employment contract outlining your role, responsibilities, benefits, and working conditions. However, before signing, it’s essential to watch for red flags in the contract.
In this article, we’ll cover:
Key clauses often found in employment contracts
What to do if your employer violates your rights
How UK employment law protects workers' rights
Tips on reviewing an employment contract
Key Clauses to Look for in an Employment Contract
Employment contracts typically include several important clauses, which vary depending on the company. Below are what to look out for in an employment contract:
Scope of employment
This refers to the job description and the basic terms of employment. This section outlines basic information such as:
Employment start and termination date (unless it is a permanent job)
A detailed description of the roles and responsibilities of the employee.
The various work benefits that the employee would be privileged to enjoy, such as, health insurance, retirement plans, paid leave, performance bonuses, maternity leave, and other perks offered by the company.
Probation period
This employment clause specifies the duration of the initial trial period during which the employer evaluates the employee's performance and suitability for the role (and vice versa). It outlines any conditions or terms that apply during this period, such as notice periods or limited benefits.
Salary and bonus
This clause outlines:
How much the employee will be getting paid
Whether they will be paid wages or salaries.
Rate or interval at which they will be promoted, and subsequently, the corresponding salary adjustments or benefits that accompany each promotion.
The bonuses or incentives the employee is entitled to, along with the schedule or conditions under which they will be paid, are listed.
Working hours and overtime
This clause outlines the standard working hours and whether employees will be paid for overtime. As an employee in the UK, it is essential that the contract you are about to sign complies with the UK’s Working Time Regulations, otherwise known as working time directives. According to the regulations, employees in the UK should not work more than 48 hours per week on average, typically calculated over 17 weeks. However, you can opt out of this limit if you wish. For those under 18, the limit is 8 hours a day or 40 hours a week.
Intellectual property ownership
This clause, also known as the assignment clause, is included in employment contracts to specify that any intellectual property created by the employee during the course of their employment will be owned by the employer. You should consider negotiating this clause if you don’t want your employer to own or claim ownership of anything you create while working.
Termination clause
This clause outlines important details like:
Ground for immediate job termination
If notice is required from either party
If a disciplinary policy is in place.
Benefits and Perks
Holiday entitlement
In the UK, full-time employees have a legal minimum holiday entitlement of 28 days (including public holidays). As a worker, you must check with your employer to see how your vacation is calculated, including whether public holidays are included and whether unused vacation time can be carried over to the following year.
Sick pay and leave
Statutory Sick Pay (SSP) is the legal minimum in the UK. Employees get paid £116.75 per week for up to 28 weeks by their employer if they are too ill to work. However, sick pay policies divers from one company to another. While some companies pay the stipulated amount in the SSP, others may pay more. Make sure to review your company's sick pay policy to understand the amount offered, eligibility criteria, and duration.
Pension and benefits
You should also confirm whether the employer provides pension contributions and other benefits such as healthcare, life insurance, and gym memberships. Make sure you understand your eligibility for these benefits and how they affect your overall compensation package.
Notice Periods and Termination Clauses
Notice periods and termination clauses outline the rules for ending an employment relationship, whether initiated by you or your employer. These clauses specify how much notice is required, how you’ll be paid during this time, and the conditions under which the contract can be ended.
Notice period
Employment contracts typically include notice periods for both the employer and the employee. This is usually calculated based on the number of years an employee worked in that company. In the UK, it is mandated that if you've worked for one month to two years, you’re entitled to at least one week's notice. For those with 12 years or more of service, this increases to a maximum of 12 weeks' notice. However, always check your contract, as employers may offer more than the legal minimum but can never provide less.
Regarding how you will be paid during this period, your employer may either pay you during the notice period or offer payment in lieu of notice.
Termination for Cause
Termination for cause is also known as termination without notice. This clause empowers employers to terminate an employee's contract without prior notice if they engage in serious breaches of company policy or unacceptable behaviour. It’s important to carefully read your contract to understand what behaviours or actions could lead to this dismissal.
Resignation clauses
If you decide to resign, it’s important to review your contract to understand the process. Your contract should clearly state whether you need to give your resignation notice in writing or if verbal notice is acceptable. Generally, if you've worked at the company for more than a month, you're required to provide at least one week’s notice. The contract may also outline any penalties or conditions for resigning, such as losing certain benefits or restrictions on working for a competitor afterwards.
Restrictive Covenants
Restrictive covenants are clauses in your contract that may limit what you can do after leaving a job. These include non-compete clauses, non-solicitation clauses, and confidentiality agreements, all of which can impact your future career plans. Understanding these restrictions before signing is important, as they can affect your ability to work with competitors, contact former clients, or share sensitive information.
Non-compete clause
The non-compete clause is common in UK employment contracts, especially in competitive industries. This clause prevents you from working with a rival company or starting a similar business for a set period after you leave your current job. Before agreeing to this, consider how it might impact your career goals, as it could limit your options in the same field.
Non-Solicitation clauses
Non-solicitation clauses prohibit an employee from:
Approaching former clients or colleagues after leaving the company.
Soliciting an employee or employees from a previous workplace to work with them at the new company.
As an employee, if you find this clause in your contract, you have to take your time and think about your immediate and future goals. This is because a non-solicitation clause can severely impact your future employment opportunities. For example, the clause may prohibit you from approaching former clients or colleagues for a set period of time after leaving the company, thus limiting your ability to build connections or launch a new business in the same industry.
Confidentiality Agreement
A confidentiality clause is mostly used by big tech companies or organisations that handle sensitive information. This clause is often inserted in an employee's contract to prevent them from disclosing sensitive information about the company to a third party, such as the press or even a rival company.
As an employee, if you have this clause in your contract and, for whatever reason, you violate it, you could find yourself in a deep legal battle or have your employment terminated.
Dispute Resolution and Grievance Procedures
Dispute resolution and grievance procedures outline how conflicts or concerns are addressed in the workplace. These processes are essential for ensuring that any issues, whether related to unfair treatment, harassment, or disputes, are handled in a fair and transparent manner.
Grievance procedures
Grievance procedures are another key element in an employment contract that outlines what an employee must do if they want to raise concerns about unfair treatment or harassment in the workplace. The procedures will also outline who to report to and how the complaint will be escalated. Below are the procedures to follow if you want to report your grievance:
Write a formal letter detailing the challenges you are facing.
Schedule a meeting with your employee to discuss the issue. face-to-face
Note that you have the legal right to appeal your employer's decision, and you can be accompanied by a third party to any of the appeal meetings.
Dispute resolution
It is also important that a contract include various dispute resolution mechanisms, such as mediation, arbitration, or legal recourse. This resolution mechanism is very important because it helps to:
Resolve disputes among employees in a transparent way.
Promote fair and structured processes for handling conflicts, ensuring that both parties have their concerns addressed professionally and on time.
Reviewing Employment Contract Amendments
Some contracts include clauses that allow employers to make changes to the terms of their employment contract. This clause contains various key elements, including:
The process for amending the contract.
The date on which the amended terms will take effect
The process for approving the proposed amendments
How the concerned parties will be notified. This could be in form of writing (text message, emails, etc.) or oral.
When a change has been made to a contract, the new arrangement, whether oral or written, will supersede any prior agreements. As an employee, it is vital that any changes you want to make to your contract be reasonable so that they don’t drastically alter your role or compensation.
Your contract should also stipulate situations where employee consent is required, such as for changes to job duties, working hours, salary adjustments, or any other significant modifications to the terms of employment. This ensures that employees have a say in key decisions that may affect their role or working conditions.
Common Red Flags to Watch For
Before signing an employment contract, you must carefully review the terms to ensure everything is clear and fair. This can help you avoid potential issues and protect your rights as an employee.
Vague or ambiguous language: Employment contracts should be clear and easy to understand. If you come across complex or vague legal terms, it's wise to ask your employer for clarification or consult with a solicitor before signing.
Excessive restrictions: It's common for employers to draft contracts that lean in their favour. However, it’s a red flag if a company includes overly restrictive or unreasonable clauses. According to UK law, all contract terms must be fair and reasonable, ensuring that employees aren't subjected to excessive or unfair limitations.
Unclear termination policies: If the termination clause is unclear, you may not fully understand the conditions under which your employment can end. Therefore, ensure that before you sign, the contract specifies what could warrant job termination and whether severance is offered.
Best Practices for Reviewing an Employment Contract
Seek legal advice: Employment contracts can be complex sometimes, so it's usually a good idea to consult with a solicitor before signing. A solicitor can help you understand what each clause entails and the legal implications for violating them.
Clarify any unclear terms: If you don't understand something in the contract and you don’t want to involve a solicitor, you can get in touch with your employer to seek clarification. Additionally, some employers may be open to renegotiating the terms of the contract. If your employer allows that, you may be able to adjust certain clauses to better suit your needs before signing.
Compare to Industry Standards: To determine if the terms of the contract are competitive and in line with industry standards, endeavour to compare your salary, benefits, and restrictive covenants with those offered in similar roles within your sector.
Legal and Regulatory Considerations
As a business owner, your employment contract must comply with UK employment laws, covering minimum wage, holiday entitlement, and sick pay. The contract should not undermine any of employee’s statutory rights that includes:
Right to conducive working environment
Protection against unlawful wage or salary deduction
The right to receive minimum wage as per legal requirements
Protection against unfair dismissal or discrimination in the workplace
As an employee, if you believe your employer has breached the contract or violated your statutory rights, you have the right to take the matter to an employment tribunal. Understanding these rights is essential for protecting yourself in the workplace.
Additionally, If you are unsure about any aspect of the contract or need assistance understanding your rights, contact an employment law solicitor.
FAQs
What should I check before signing an employment contract?
Before you sign your job contract, make sure to review some of the key clauses in employment contracts in the UK, including important elements such as salary, benefits, notice periods, start and end dates, restrictive covenants, and termination conditions.
Can my employer change the terms of my contract without my consent?
No! The law forbids employers from altering the terms of an already-agreed contract without the consent of the employee. However, an employer may be allowed to terminate a contract without prior notice if the worker is found guilty of misconduct. To ensure compliance, employers should get expert help or advice.
What are restrictive covenants, and should I agree to them?
Restrictive covenant employment contracts limit your ability to work for competitors or solicit clients after leaving the company. The decision to agree to them, however, depends on your immediate and future goals.
How do notice periods work in employment contracts?
Notice periods specify how long either party must give notice before ending the employment. These vary depending on the number of years or months the employee has had the job. Typically, the notice period is often between one to three months.
What can I do if I disagree with the terms of my contract?
Before you sign the contract, if there is a term in the agreement you don't agree with, you can discuss your concerns with your employer or your solicitor.
Conclusion
Whether you are just starting your first job or are already a seasoned pro, it is still essential to carefully review your employment contract to catch any potential red flags. Taking the time to understand the terms of your contract ensures that you make informed decisions and avoid actions that could negatively impact your career or future job prospects.
To help you make informed decisions and safeguard your career, Lawhive is here to assist. Our expert employment solicitors can help you review the contract, explain the implications of each clause, and guide you through the entire process to ensure compliance. Get a free legal assessment today.