Employment and Supply Contracts

We’re all guilty of skim-reading a contract, but there are some key T&Cs that should be always be noted and read in detail. Failing to do so could spell trouble for you or your business.

Pay attention to the details

Regardless of the nature of the contract you’re about to sign, ignoring T&Cs is a no-no. Whether it’s an employment or supplier contract, pay particular attention to the below terms…

Accuracy

On a general note, check that your and the other parties’ details are correct, and make sure that the terms accurately represent the purpose of the contract. If these details are wrong you need to bring this to the attention of the issuing party urgently, so amendments can be made before you sign.

Conditions

The conditions in a contract set out what needs to be completed before the agreement comes into effect. For example, you may be asked by an employer to provide your passport and bank statement as proof of your address. If you don’t, your employment contract won’t be valid, leaving you without a job.

Agreements

These outline the rights and obligations of the parties involved. Essentially, these set out what you agree to do. Let's say you agreed to purchase 50 boxes of paper from your stationary supplier for £250. These terms will set this in stone and create an obligation on your part to make payment to the supplier upon delivery of the paper. Therefore, you need to make sure that the agreements reflect what you are expecting.

Limitations

It’s important to note any limitation clauses, which seek to limit the sum that can be claimed in an event of breach of contract. These are fairly common and exist in numerous scenarios. A typical example would be supply of services, where the supplying party seeks to protect itself if the other party is sued due to their use of the services.

It’s extremely important that you read these in detail - the clauses can affect both parties.

Remuneration

Unsurprisingly, this is the term that interests people the most – it’s in relation to salary. It sets out how much you’re paying or being paid. If you’ve spoken about payment terms prior to the contract being given to you, do ensure that the terms in this section are correct and crystal clear. If you’re unhappy with the terms or you have a query, raise this before you sign anything - you don’t want to end up being out of pocket!

Termination

If you take anything away from reading an employment contract it should be your remuneration and your termination details, especially since such terms can be specifically tailored to you and the contract.

Events of termination are necessary because they set out what will bring the contract to an end, and what happens on the event of termination. For example in an employment setting, this term will set out notice period, redundancy pay, return of company property, etc.

Restrictive covenants

These terms are becoming more and more common, especially in employment or supply of services contracts. They seek to restrict a party’s actions once they’ve left the contract – you could be limited to the location of your new enterprise, or restricted to a period of time after you’ve left employment before you can work in a certain area.

If you note only these clauses prior to signing, you should have a general idea of the contract and if you feel terms are too harsh, you will need to negotiate prior to signing and signalling your agreement. However please ensure you have read the entire document as you can never be too sure what else may be lurking in the small print.

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Remuneration

Unsurprisingly, this is the term that interests people the most – it’s in relation to salary. It sets out how much you’re paying or being paid. If you’ve spoken about payment terms prior to the contract being given to you, do ensure that the terms in this section are correct and crystal clear. If you’re unhappy with the terms or you have a query, raise this before you sign anything - you don’t want to end up being out of pocket!

Termination

If you take anything away from reading an employment contract it should be your remuneration and your termination details, especially since such terms can be specifically tailored to you and the contract.

Events of termination are necessary because they set out what will bring the contract to an end, and what happens on the event of termination. For example in an employment setting, this term will set out notice period, redundancy pay, return of company property, etc.

Restrictive covenants

These terms are becoming more and more common, especially in employment or supply of services contracts. They seek to restrict a party’s actions once they’ve left the contract – you could be limited to the location of your new enterprise, or restricted to a period of time after you’ve left employment before you can work in a certain area.

If you note only these clauses prior to signing, you should have a general idea of the contract and if you feel terms are too harsh, you will need to negotiate prior to signing and signalling your agreement. However please ensure you have read the entire document as you can never be too sure what else may be lurking in the small print.