Employment Contract Terminologies you need to Know

Employment Contract Terminologies you need to Know

What would constitute a non-compete agreement in California? What does redundancy pay mean? There are many legal terms in employment contracts, all of which are important as they can have more impact than one would think. Today we look at some of the common employment contract terminologies you need to know.

Extent of Services

It is a term that addresses the number of days, hours, etc., that you must work. It should include specific hours and convey which days of the week hours apply. For example, some companies run limited operations on Saturdays, which would mean fewer hours.

Others operate at full capacity, yet other companies do not operate on weekends, not at all. Regardless of a verbal agreement, the extent of the service clause informs what they expect of you. That is one of the most difficult terms of a contract to renegotiate later.

Applicable Law

This one is confusing in just how literal it is. Reading the phrase ‘applicable law’ in a contract gives the impression that all sorts of laws apply to your industry with which you are not familiar. In reality, applicable law refers to local, state, and federal laws that apply to your place of employment.

It usually covers theft and fraud because companies can’t make up their own rules or laws about judging and punishing. When an incident requires the company to claim from their insurance, they must follow applicable law. In other words, if you steal from the company, they need to press charges before submitting their claim.

Restrictive Covenant

This arcane-sounding term sounds like it applies to the restrictions when joining a fancy new witch coven. But, in reality, it can be more of a curse. A restrictive covenant is a clause that restricts either the company employee from doing something for either their term of employment or indefinitely.

That means that the clause could apply to you for the rest of your life. And yes, it is never the company that enters a restrictive covenant. It is almost always the employee. Usually, such restrictions are very specific to the duties you perform for the company and, as such, aren’t too much of a problem.

But always ensure how your future might get impacted by a restrictive covenant. If the terms are too general, it could end up causing you more problems than the job is worth. Traditionally, the restrictive covenant should apply to a company’s technology or company secret exclusive to the company.

Non-Solicitation Agreement

It is a clause that attempts to protect the company should you try to hire other employees away from the company. We say ‘attempts’ because it can be challenging for the company to prove unless they get testimony from an employee you tried to tempt away.

In most cases, however, it is not enforced. There is nothing illegal about an employee applying for a job at a company that an ex-employee works at now. It is a pretty common practice in head-hunting strategies.

Non-Disclosure Agreement

We have all heard of this one, but the non-disclosure agreement usually applies to very specific information, much of which is pretty logical. For example, you should not disclose trade secrets, the company’s financial information, upcoming products*, and market strategies.

So basically, anything that puts the company in jeopardy. The NDA should clarify specific information and not be too general in its language.

It’s essential to know all the important terminologies on your employment contract and how they impact your employment. Perhaps you may later be dealing with wrongful termination, unpaid overtime, or other legal issues that will refer back to your employment contract.

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About the Author: Barry Lachey

Barry Lachey is a Professional Editor at Zobuz. Previously He has also worked for Moxly Sports and Network Resources "Joe Joe." he is a graduate of the Kings College at the University of Thames Valley London. You can reach Barry via email or by phone.