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What to look out for before signing a contract

28th June 2016

Article written by:

iContract

Finding a new job is very much like dating. It’s all nerves and excitement as you go through all the emotions: “I think they like me”… “yes, they do like me!” … “hurrah, they chose me!”    

But in recruitment (hopefully unlike dating), the magic can wear off quickly when you are faced with a daunting legal contract.

  

iContract’s Paul de Francisci has been in your shoes. Here, Paul deciphers the jargon and shares his expert tips on making your contracts work for you.

1. When are you expected to work?

Make sure both you and the employer are very clear on the start date, duration of the contract and how many hours per day or week you will be at their beck and call. Remember not to undersell yourself on the hours, because as a contractor, you will not be paid overtime.   

2. What exactly is your job?

This will be presented as a scope of work, outlining the roles and responsibilities you will be expected to perform. Study this carefully, to make sure you are not expected to pander to the demands of everyone in the organisation.

 

“The client may want to make the scope as broad as possible, but the contractor should always keep it focused on the true purpose of the role,” Paul says.   

3. Are you able to do the job?

Do you have the knowledge and expertise needed to carry out these tasks? And are you sure you are not infringing any obligations you made to previous employers – like not being able to work for competing companies for a period of time after resigning, for example? Most contracts will also contain a generic responsibilities clause, assuring the employer that you will perform to the best of your ability.   

4. Do you have the paperwork to prove it?

This is particularly important for contractors in law and accounting – do you have the necessary qualifications to do the job? Are any registrations with professional bodies still valid? Have you kept up your minimum continuing professional development obligations?   

5. How much are they paying you?

Contractors may receive a higher hourly rate than full-time staff equivalents because they don’t receive employee benefits. Make sure your fees are high enough to compensate for paying for things like your own insurances and pension contributions. Be sure to clarify which work-related expenses you will be able to claim as well, like travel for out-of-town meetings.

There are additional clauses the employer might add-in just to protect themselves.   

6. Are you truly a contractor?

This covers the client for tax purposes. They may additionally want to confirm that you are not employed by any other third party, nor acting as an agent for a third party. The client will want to ensure you and the contractual relationship falls outside the Intermediaries tax legislation, better known as IR35 – more information is available here: https://www.gov.uk/guidance/ir35-find-out-if-it-applies

7. Are you sure you will sort out your own tax?

For some employers, your word is not enough, and they will ask you to sign an indemnity form to make sure they are not held liable. Read more in our financial matters guide

8. And your own insurance?

As a contractor in Britain you are responsible for making your own National Insurance contributions. Professional liability insurance may be required by your client, especially if you are being employed for your professional qualifications; you should ensure that any policy you take out covers negligence towards both the client and any third parties. You may also want to take out medical and travel insurance to the extent not provided by your client for work and travel on the client’s business.   

9. Confidentiality and non-compete clauses

Depending on the nature of the work you are doing, there may be a confidentiality and a non-compete clause in your contract. This would be the case for people working with sensitive information, for example specialist trading data if you are in a financial services role. If your contract stipulates that you cannot work for competing companies during your retention as a contractor or for a period beyond the end of your contract, you’ll need to make sure the remuneration and duration of the contract compensate. On the other hand, if you have created or intend to create a new piece of technology or new algorithm that you will be bringing to the company while you are contracting for them, you need to decide whether this will be your or your client’s property. A lawyer can help you include an appropriate clause.   

10. Termination

Most employers will try to get away with an immediate termination, but Paul recommends negotiating at least 30 days notice so you have time to line-up something else, should they decide to let you go for reasons beyond your control. “Most contracts will typically be very biased towards the client,” Paul says, warning that it’s a good idea to check-in with a legal expert before you sign anything.    

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