Don’t Sign an Employment Agreement Until you Understand these Points!

Don’t sign that employment agreement until you understand these three points.

Hi, Simon from The Contract Company. Contracts, that’s what we do all day, every day and sometimes overnight, and we’ve done a lot of them.

Right out, so you wanna know what to look for in that employment agreement before you sign it. Good idea.

So there are a couple of key things in an employment agreement you always need to look for. Obviously there’s the basic stuff, right, which I assume you’re gonna be all over.

The Usual Employment Agreement

Things like what is your salary? What are your hours for work? And you know, what do you leave entitlements in terms of annual leave and carer’s leave and that sort of stuff?

Those to me are the basics, you will always check that because you’re interested in.

But often what I’ve seen clients do when it comes to the other standard stuff in the contract by the SCA, whatever, that don’t really care. There’s a couple of things in the I-don’t-really-care category that you really need to look out for.

3 Things You Need to Check in an Employment Agreement

1. The Non-Compete Clause

One you need to look for is the non-compete.  That is a clause that basically says you won’t go and join a competitive business.  This means a business that competes with this business at some point in the future.

Now that has a real impact because it can stop you finding employment with another business in the future, if you leave this current arrangement you’re about to sign up to.

So that can, I was gonna say negatively impact and that’s right, it can negatively impact your employment prospects in the future.

2. Restrictive Restraint

The other thing too, is you don’t wanna sign an agreement that’s got an overly restrictive restraint. So in other words, it may say something like you can’t work in this competitive industry for say three, six, nine months within a certain region.

You don’t wanna sign a contract that has that in there either because that can also really restrict what you can do in the future.

If you’re a CEO an executive level, then it’s normal to put in restraint for executives. But for lower-level people, it’s probably not so important. So I would watch out for that.

3. Clause Against Side Hustles and Running Own Business

In this day and age too with people freelancing and doing side hustles, I would also check as to see whether there’s any clause that stops you running your own business.

Now, I don’t believe you should require your employer’s consent to do that as long as the business you’re running on the side has nothing to do with your employment or business.

So let’s say you’re, you know, a lawyer and you want to sign up to provide legal services to some firm, that’s what you’re gonna do with your day to day job.

But your side business is, you know, making videos about marketing on YouTube.  Then, in my view, why should you need to seek your employer’s consent to make something that’s nothing to do with your work relationship?

Anyway, that’s just my view and everyone else, well not everyone, but a lot of other people will have a different view about that. But just make sure that your contract doesn’t require your employer’s consent to do your side hustle.

A Recap

And those are the three key things you should look out for in any employment agreement. The general terms and conditions in terms of salary, pay, leave, well salary and pay are the same sorry.

But you leave, carer’s leave, salary, then you wanna look at any sort of restraints, any sort of non competes and then any sort of obligations in relation to you know side businesses, etc.

I hope that helps. If you have any questions, please feel free to get in touch with us simon@contractcompany.com.au or 1800 355 455 Thanks very much.

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