September 24, 2022

8 Important Things to Know Before Signing an Employment Contract –

You have got a new job and are not sure about how to sign an employment contract? Worry not! We are here to help!

Job Description

Review the job duties and responsibilities as mentioned in the employment contract. Ensure the description matches the information stated in the original job posting before signing an employment contract. Else, later you might find yourself doing things that you never wanted to do. Be sure of what you are willing to do & where to draw the line when asked to take on additional or different kinds of work.

Salary, Benefits, and Bonuses

Ensure that your employment contract reflects the salary mentioned in your offer letter. The CTC should be clearly defined so that an employee knows what exactly would be the in-hand salary. Your contract should stipulate additional incentives and perks such as bonuses, health benefits, and travel expense reimbursements. There are two types of bonuses – guaranteed and discretionary.

A discretionary bonus is not disclosed in advance. Read & understand what you owe and what you need to earn through your performance. If there are any concerns, be wary, and discuss with the employer before signing the formal contract. Also, check the payment method & the salary release date. You should know when & how you will be paid.

Paid Leaves

Taking regular breaks is essential to maintain a work-life balance. Before signing an employment contract, check how many paid leaves you have in a year so that you can plan them accordingly. Pay attention to compulsory holidays, they are different for different countries. New employees should also know the number of leaves allowed to them during the probation period. Your contract should also state whether you can carry forward your leaves to the next year

Working Hours

Your contract should state your working hours. Though most firms operate on the basic eight-hour day with an hour for lunch, many now offer flexible working. Check how many hours you will be working each day, including the allocated time for lunch or breaks. Do not agree to a working pattern that you might object to later. It’s best to negotiate a variation at the beginning of the agreement, as the work-life balance is essential to remain productive and stress-free. You need to ensure that the working hours suit you.

And if you are required to do overtime or have to work on weekends, check – how will you be paid for it. Sometimes instead of being paid for overtime, the employees are given holidays commonly called “time-in-lieu.” Other times you are expected to do overtime without being paid for it.


Read and understand the terms of termination, and clarify in case of doubt. Be wary of the termination policies before signing an employment contract, otherwise you might end up agreeing to terms where you could be terminated any time without any notice. Even worse, without any reason. Your employment contract should include details on how your service can be terminated – Just Cause, Without Cause, and Resignation. Just Cause – When you have broken relevant contract rules. Without Cause – this usually happens when the company is downsizing. Resignation – the employment contract ends because you have decided to leave the company. You should carefully read the termination policy before signing an employment contract.

Notice Period

Check your notice period, a notice period between 1-3 months is usual. The too-long notice period can hamper your chances of taking up a new job. Find out exactly how long your notice period is and if it varies depending on the tenure of your job and the circumstance of your departure – have a plan of action for any eventuality.

It’s also important to check if there is a 30-day notice period (unspecified), 30 business days’ notice period, or one calendar month. A 30-day notice period (unspecified) means – notice can be given on any day of the month and your employment contract will then terminate in exactly 30 days (the 30 days will include weekends), whereas 30 business days means only Monday-Friday (excluding public holidays and weekends) will count as part of the 30 days. A calendar month could mean that the employer expects you to let them know on the first of the month – so from the 1st to the 30th / 31st would be one calendar month.


The confidentiality clause prevents employees from disclosing confidential information such as trade secrets or proprietary information to third parties.

Restrictive Clauses

Pay attention to restrictive clauses. They often take effect after the termination of employment and are relevant to employers as they protect their business, their clients, and other employees.

There are four such clauses – Non-competition, Non-solicitation, Non-dealing, and Non-poaching. Non-Competition Clause – Prevents you from working for a competitor of your employer. Non-solicitation clause -A no-solicit clause prevents you from hiring a company’s workers, past workers, or current or past clients. Non-dealing clauses – Limits you from dealing with former customers and suppliers. Non-poaching clauses prevent former employees from poaching former colleagues. You have to check & ensure these restrictive covenants are not negatively impacting your future job opportunities. Knowing & understanding what is on your employment contract will help you make an informed decision and allow you to carefully weigh your options before signing an employment contract.

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