If your career is on an upward trajectory, eventually you will earn a new opportunity that brings with it something you haven’t encountered: an employment contract.
Employment contracts are serious business that can have far-reaching effects on you, your career and your family. With that in mind, here are questions that many people have about employment contracts.
Why do companies use employment contracts? Companies value employment contracts because the terms can give companies control of future events. For example, an employment contract can prevent an employee from criticizing the company if and when an employee leaves the company.
How can an employment contract help me? A contract gives both the company and you assurances and protections. For example, terms of an employment contract can give you a soft landing in case the relationship doesn’t work out.
What are common provisions in employment contracts? You’re likely to find the following in most employment contracts:
- Compensation (How and when does compensation increase, or decrease?)
- Details regarding equity in the company
- Scope of the job
- Termination (What are the grounds for dismissal?)
- Protection from liability
- Confidentiality provisions
- Disability and death (What is a disability? What happens if disability occurs? Upon your death, what happens to benefits for your family?)
- Dispute resolution
What’s a common mistake that employees make? A big mistake is not reading the contract carefully and thus not understanding its terms. For example, an employee might think he or she is signing a three-year contract but overlook language that says the employer can dismiss the employee at any time, for any reason.
Should I negotiate? Of course you should. Companies expect the other side to carefully consider all terms and come back with changes. (This is when having a skilled employment attorney on your side is extremely important.)
What if the company is sold? Takeovers are a reality, and your employment contract should protect you in case one occurs. “Golden parachutes” are contract terms that protect and/or compensate employees when takeovers happen.