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Employment contracts – what to look out for when starting a new job

When starting a new job, many employees will often overlook the crucial part of reviewing the finer details of their employment contract.

employment contract

Contracts of employment are important documents as they set out the key terms of your employment with your new company. It is therefore vital to check these terms carefully before you agree to them. In particular, you need to query the following before you sign on the dotted line:

Does the remuneration package and job title accurately reflect what has been agreed?

If there has been a verbal discussion regarding the terms of offer and/or you have been sent an offer letting setting out the key terms of your employment, it is important that you check whether the contract accurately reflects what has been agreed. Furthermore, your employment contract should also include your job title as well as the responsibilities expected of you. It is essential to review these responsibilities to ensure they are the same as what was discussed with you during the interview process.

Are your bonus conditions clearly outlined to avoid dispute at a later date?

If your employer is offering a bonus, make sure you know what the bonus plan terms are, and what you must do to be eligible for a bonus. There are two types of bonus: guaranteed and discretionary. The former is owed to you following the completion of a certain set of objectives and the latter is granted by the employer at their discretion.

I have seen many examples of cases where employers have referred to bonuses being linked to targets and objectives that are to be confirmed at a later date. Clearly, if such targets or objectives are not set out from the start in the contract, this is a recipe for dispute and disagreement at a later point.

With regard to discretionary bonuses, it is worthwhile noting that this does not mean that your employer simply has an unfettered discretion in choosing not to make any bonus payments to you and if such discretion is exercised perversely or irrationally, you still may be entitled to such payment.

Where will you be working from?

Make sure you know exactly where it is you will be required to work. Employers often include wide reaching relocation clauses which permit them to relocate you (sometimes anywhere in the UK or even abroad) and if this is the case, your employer will naturally be in a stronger position if you object to any subsequent move at a later stage.

It is also important to note that if there is a relocation clause, this may affect your rights to a redundancy payment if you refuse to work in a new location, but agreed to do so in your contract of employment.

Restrictive covenants – what happens if you decide to leave?

When starting a new job, it is doubtful you will be giving any consideration to what will happen if you are going to leave.

However, if your contract contains post-termination restrictions, it is crucial that you make sure you are happy with them and, if not, query them. This is because future job prospects may well be hindered if the covenants in your contract are too restrictive. The most common type of covenants usually seek to prevent you from poaching clients and former colleagues, or working for a competitor for a period of time after you have left employment, the duration of which can vary depending upon the seniority and scope of your role. You may also wish to consider reaching agreement with your employer that you are not restricted from dealing with clients and contacts that you had strong relationships with prior to commencing your new job.

To find out more about restrictive covenants, click here.

What are the provisions for holidays, sick pay and maternity leave?

Is your employer offering the bare minimum holiday entitlement and are there any provisions as to when you can or cannot take holidays? The minimum entitlement for an employee working a five day week is 28 days per year, inclusive of public holidays.

It is also worth checking if your employer offers any sick pay over and above Statutory Sick Pay or if any enhanced maternity pay schemes are provided.

What is your notice period?

Finally, check your notice period. Make sure that the notice you have to provide to your employer is not greater than the notice period they have to provide to you. Is your notice to which you are entitled no less the statutory minimum (1 week for each complete year of service up to a maximum of 12 weeks). If you are a senior employee you may expect to be entitled to greater notice of the termination of your employment (typically between 3 – 6 months).

If you are due to sign a new job contract it is important to ensure that you carefully read all of the terms to make sure you are happy before committing to a contractual document. Should you require advice on any aspect of your employment contract, please do not hesitate to contact Alan Lewis or Carley Kerrs-Walton of our Employment Department on 0161 837 6807, or email us on enquiries@lindermyers.co.uk

Find out more about our Employment department
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