4 Clauses You Shouldn’t Overlook When Signing An Employment Contract

signing contract

You may be presented with a pile of overwhelming paperwork when you take up a job offer. The new job or the promising salary could be so enticing that you may sign the contract in a hurry. Beware! Neglecting tricky clauses could hurt your career, big time.

Some phrases in the contract like “noncompete” or "non-solicit of employees" may sound very legal. However, these clauses could sometimes restrict you on who can hire you or where you can work in your next employment. Brad Newman points out that before signing a contract, it is crucial to look for clauses that restrict your options as you leave a position.

These clauses are generally prepared to protect the intellectual properties of the company and they are becoming more and more popular amongst employers. Care should be taken to ensure that you don’t comply with ideas that you don’t agree. It is not a bad idea to negotiate with specific clauses to give yourself more freedom at work.

That said, you must study these 4 crucial clauses prior to signing your next employment contract.  

1) Non-Compete Agreement

This clause restricts employees from joining a rival company for a given period of time or in certain geographic areas. The clause aims at protecting confidential information or projects. But these can hinder you from leaving a job or applying to certain companies. Brad Newman goes on to say that companies want these clauses to be lengthy and broad while employees want them to be narrow and for shorter period of time. He advices employees to negotiate against these clauses so that they have more flexibility in their next job opportunity.

2) Non-Solicit Agreement

Non-solicit Agreement limits you from approaching former clients or colleagues in your previous organization, after you are transferred to a new company. This clause is designed to ensure that your former employer does not lose his potential employee, client or business. So if you plan to start your own business later and use the experience and expertise of your former company, think again.

3) No-hire Agreement

Quite similar to the ‘Non-Solicit Agreement’, this clause restricts you from inviting your former colleagues to your new business or organization (especially when it is a rival company). The clause became very popular and controversial after giant companies like Apple and Google used them in order to keep wages low. When you sign a contract containing this clause it automatically prevents certain companies from hiring you, thereby adding more restrictions to your mobility.

4) Pre-Invention Assignment Agreement

This clause impels new hires to reveal any possible inventions or innovations made by them prior to joining the company. The clause ensures that companies don’t lose patents. As a result it restricts new hires from obtaining projects from former rival companies. Breaking this clause will allow the new company to claim ownership of your hard-earned assignments. Newman recommends that if you are an employee who is expecting your new inventions to succeed shortly, it is better to disclose them beforehand. This way there will be no complications or confusions on who owns your project.

As you would have realized by now, signing up a contract is not a formality. It can be more serious than you think. Hence, you are better off reading every line carefully before signing your contract.