Employees: Understand These 4 Common Employment Contract Clauses

When you are ready to start a new job, signing paperwork can seem like little more than a formality. However, it is crucial that you read and take these documents seriously, especially when it comes to your employment agreement.

Employers include a number of clauses and terms in these agreements that can affect everything from your rights in the event of a dispute to where you might work next. Below are four common clauses you could see in an agreement and what they mean for you.

  1. Arbitration agreement: Agreeing to arbitration means that you will not be able to litigate employment disputes; you will go through arbitration. Giving up the option to file a lawsuit may not be something you are interested in so employees should consider these clauses carefully.
  2. Non-compete clause: These clauses place restrictions on where you can work after your current employment ends. They might prohibit you from working for certain companies, in certain capacities or within certain geographical regions. If these are overly restrictive and you agree to them, you could have a very difficult time securing future employment.
  3. Confidentiality agreement: If you sign a confidentiality clause, you should be aware of what information is involved, how long the agreement lasts and what the penalties might be for violations. 
  4. Termination clause: These clauses will specify under what circumstances you might be terminated. You should read these specifications carefully in case there are any red flags or concerning terms that might be unfavorable.

It is important that you consider these clauses carefully so that you understand what you are agreeing to. If you fail to do this, you could be caught off guard with regard to your rights as an employee, your future job prospects and your security within the company.

Because there can be so much at stake with these contracts, and because they are often more complex than you expect, it is a good idea to be cautious. Remember, too, that you can review the contract with an attorney before signing.