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7 Things to Check Before Signing Employment Contracts 1

7 Things to Check Before Signing Employment Contracts

After a grueling recruitment process, you finally land the job you want and can’t wait to sign your offer letter and start working. While there’s excitement at the thought of starting a new job, there’s also the overwhelming feeling of going through all the paperwork before you start. 

The paperwork we’re talking about here is your employment contract, and it is imperative that you read the fine print thoroughly before you sign it. This has to be done even if you have already discussed all the terms with the company’s HR. The more clarity you have on the terms and clauses stated in your contract, the less trouble you’ll have in the future. Here are seven things you should check before signing the contract.

#1. Job Description  

Simple enough but this is important. Always check that your job description properly describes all your duties as discussed with the HR. An inaccurate job description in your contract might send you down a path different from what you agreed to in the beginning. 

#2. Salary, Benefits, and Bonuses 

This section should clearly state the distinction between CTC and your take-home salary. CTC or Cost to Company is the total salary package of an employee which indicates the total amount of expenses that a company spends on an employee for a year. The CTC includes the employee provident fund, health insurance, gratuity fund and taxes. 

Your take-home salary is the final amount that you get after the above deductions have been made. Your contract will first state the ‘Basic Salary’ which is what you will get every month followed by the cost to company components and their amounts. 

Go through this section in detail and clear any doubts you might have with respect to the CTC components and your basic salary. Your contract also clearly states all information regarding incentives, paid bonuses, travel expenses and other reimbursements, including the terms on which they will be given. 

#3. Overtime Rules 

As a software engineer, you can expect projects where you will be required to work overtime, that is, more than 9 hours a day and more than 45 hours a week. In India, if an employee works more than 48 hours a week, they are entitled to overtime pay as per the Factories Act, 1948. Look out for clauses mentioning overtime and its compensation structure in your contract.  

#4. Holidays and Leaves 

Every company differs in its regulation of holidays and festivals as well as leaves available during probation and notice periods. Note down your company’s policy on annual leave and the festival holidays and be clear on the process involved in applying for leaves.  

What you should keep an eye out for in this section of the contract:

  • Number of vacation days (annual leave) you are entitled to and when you can take the bulk of these days off
  • Number of sick leaves
  • Maternity/Paternity leave
  • If your annual leave can be carried over

#5. Intellectual Property Clauses

Some clauses state that the employer owns all intellectual property rights for any work you produce during employment. As a software engineer, you will probably develop a lot of your own code which will be used by the company. So ensure your doubts and questions about the company’s intellectual property clause is clarified and/or removed.

#6. Workplace Policies and Restrictive Clauses 

We’ve already mentioned the IP clause but there are several other clauses you should look thoroughly into. Some contracts will state that you can’t work for any competitor for a certain number of months after leaving the company. 

Restrictive clauses usually take effect after your termination and some of these can hinder future job prospects. Some of the restrictive clauses would include:

  • Non-compete clause – as mentioned earlier, this prohibits employees from working for a competitor for a certain length of time or in a certain geographical area after leaving your job.
  • Non-solicitation clause – this restricts you from poaching clients when you switch to another company.
  • Non-dealing clause – this clause prevents you from dealing with or contacting former colleagues and employees.
  • Non-poaching clause – this clause prevents you from poaching employees and former colleagues.

When you go through these different clauses and something doesn’t sit right with you, you can try and negotiate the terms of the clauses and come to some agreement. 

#7. Termination 

You just got a job so you probably don’t want to leave anytime soon but you must understand very clearly the termination clause stated in your contract. We’re not just talking about things like your notice period and such but the legal aspect of this clause. This includes the grounds on which your services can be terminated and conditions surrounding your exit from the company. Get all the clarification you can when reading this section.

Conclusion

We’ve listed seven things that we feel deserve your utmost attention in your employment contract. However, this doesn’t mean you can overlook the rest. You must read every line written in your contract before you sign it (emphasizing this again only because it’s that important). Remember, it’s better to be safe than sorry.

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Surya Narayanan

Surya Narayanan

Director of marketing and growth at Talent500. Driving the mobile first approach. An out and out ideas person. Leads his conversations with science and reason. Mentor to many. Always curious, always smiling.

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