Know your employment contract

This post came out from The Straits Times (11 June 2015)
Title -Think it through (Things you should know about the employment contract)

Some pointers that I've got are:
1. Remuneration: Salary, commission and bonuses
2. Confidentiality clause
3. Non-compete clause
4. Non-solicitation of customers and employees
5. Intellectual property rights
6. Termination
7. Dispute resolution

On Remuneration: Salary, commission and bonuses

• While remuneration may be considered from the perspective of an annual package, clarity on how this is structured is necessary.
• How much is the basic salary? How much is the commission and bonus? Are the latter at the employer's sole discretion? Are they condition upon fulfillment of certain targets? Are these conditions clear?
• Often, costly litigation has been fought because of unclear conditions. Are there claw-back provisions or disincentive provisions that seek to forfeit certain entitlements?

On Confidentiality clause

• Certain jobs require providing the employee access important confidential information. Hence, there is a need to ensure that employees do not misuse, misappropriate or disclose confidential information.
• Is it clear what constitutes confidential information in the first place? What constitutes a breach of confidentiality? How long does the confidentiality obligation last?

On Non-compete clause

• Also known as restraint of trade covenants, such provisions typically restrict the employee from working in the same industry or trade for a certain period of time after leaving the company.
• The law will consider whether there are legitimate interests that the employer seek to protect via the non-compete clause, and how reasonable the terms are between the parties. 
• Note also that there is increasingly an utilization of cascading or discretionary restraint of trade covenants, whose validity may not be certain an would require a act-specific analysis. It should also be noted that there is an interplay between non-compete and confidentiality clauses, which may affect the validity of non-compete clauses

On Non-solicitation of customers and employees

• Related to the non-compete clause is the non-solicitation clause that prohibits employees from soliciting the employers' customers and employees.
• In practice, some provisions prohibit the ex-employee from soliciting customers whom he or she had introduced or brought to the former employer

On Intellectual property rights

• In industries and jobs which involve intellectual property rights such as copyright, industrial design and patents, employment contracts often stipulate whether such rights are wholly owned by the employer.
• This may mean that the employee cannot subsequently make a legal claim for ownership to, or monetary returns in respect of, those rights. Some employers are agreeable with joint-ownership of the intellectual property and the sharing of monetary proceeds in respect of this.
• In such instances, how wide is the scope of the clause? Would inventions, designs and intellectual property rights made outside of the job scope or industry also fall within the clause?

On Termination

• Termination clauses can be the most notorious in employment contracts because they not only determine how the employment relationship can end, but also whether certain entitlements and benefits will accrue.
• It is imperative to consider whether the provisions which allow for termination of the employment are specific and not broad-ranging or discretionary.
• Where there are terms for termination, consider how long the notice period is. What contractual entitlements (e.g. bonuses, commissions) are affected by termination or any specific ground for termination?

On Dispute resolution

• In the event that there are disputes, how are they to be resolved? This is crucial because it would affect how costly the dispute resolution process would be for parties, how long it would take, and whether it would be confidential or not.
• Consider whether there is a requirement for mediation between the parties before the dispute can be elevated to arbitration or litigation. If it comes to arbitration or litigation, what is the stipulated forum, and would it be an exclusive forum or jurisdiction?

Yours,
Something Small Thinking Big