Understanding your employment contract

If you’re working, it’s important to understand how your employment contract establishes the rights and responsibilities for both yourself and your employer as your rights at work are also affected by your employment status.

Employees often assume that their obligations under their employment contract cease when they stop working for their employer. This is not always the case. Ordinarily, restraint of trade, confidential information and intellectual property clauses will continue to bind you even after you have terminated your employment contract and moved to a new job.

Most employment contracts create restraints of trade. Restraints of trade restrict your ability to start and work for new businesses once your employment has ended. They include:

  • ‘Non-compete’ clauses, which prevent you from setting up or working for a competitor who operates within a defined geographical area for a particular period of time.
  • ‘Non-solicitation’ clauses, which prevent you from contacting your employer’s clients to seek their business, or from enticing other employees to join a new or different business.

Although they are not always enforceable, these clauses can make it difficult for you to take the next step in your career after you leave your current job.

Many employment contracts have clauses under which your employer can take ownership of the intellectual property in any original works that you develop while you are on the job. Some employment contracts give employers rights over an even broader range of intellectual property.

Many employment contracts give employees the opportunity to receive bonuses. These bonuses may take the form of a 13th cheque. Employment contracts often say that an employee will not always be entitled to a bonus and that the employer has a ‘discretion’ to pay them. Some funders will not allow bonuses to be paid from projects funds. While this is true, most employment contracts will be interpreted to require the employer to act reasonably when deciding whether or not to pay a bonus. This is particularly so where the bonus is linked to objectively verifiable performance metrics or specific funded programs. If you have clearly met the criteria for a bonus, you may be entitled to it even if the employer exercises a discretion not to pay it to you.

With the unemployment rate at 27.1% in South Africa, job seekers are easily duped into bogus job opportunities.  When a job opportunity presents itself, prospective employees are so eager to start earning a salary that they fail to ensure that they read and understand the employment contract before signing it. Caught up in the excitement, contracts were not understood or not even read before signing.  This contributes to a lot of anger and frustration when the donor landscape changes, funding is withdrawn and contracts have to be terminated.

Whilst it may seem obvious, it is important to emphasize not to sign until you have read and understood your contract.  Read with insight, ask questions and make an informed decision.




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