New in a Job Market? Contract Terms You Should Know

15 March 2023

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As a new entrant to the job market, your employment contract is your roadmap to a successful career. However, understanding the terms and conditions outlined in your contract can be overwhelming.

In this blog, we'll take a closer look at some of the most common contract terms you need to know to navigate your new job confidently.

Probation Period

A probation period is a trial period during which the employer can terminate the contract without notice. It typically lasts one to six months and allows the employer to assess the employee's suitability for the role. A lack of knowledge about the probation period can leave employees vulnerable to unexpected termination.  

Notice Period

The notice period is the time an employee or employer must give before terminating the contract. In Europe, notice periods are typically more extended than in other parts of the world, ranging from one to six months. Employees who are unaware of their notice period may find themselves without a job or facing legal action.  

Termination Clause

The termination clause specifies the conditions under which the contract can be terminated, including the notice period and any other relevant details. A lack of understanding about the termination clause can leave employees at a disadvantage if their employer decides to terminate the contract.

Non-Compete Clause

A non-compete clause prohibits the employee from working for a competitor or starting a competing business for a specified period after leaving the company. Employees who sign a contract with a non-compete clause may find it difficult to find employment in the same field after leaving the company.

Confidentiality Clause

A confidentiality clause prohibits the employee from disclosing confidential information about the company, including trade secrets and customer data. A lack of understanding about the confidentiality clause can result in legal action and damages if the employee violates the agreement.

Intellectual Property Clause

The intellectual property clause specifies who owns the rights to any intellectual property created by the employee during employment. A lack of knowledge about the intellectual property clause can result in employees losing their rights to their work.

PILON Clause

Payment in lieu of notice is an arrangement where an employer pays an employee a sum equivalent to the notice period rather than requiring the employee to work the notice period. This provision is essential for employees as it provides financial security during a job transition. It allows them to begin their job search immediately, knowing they have some financial resources to rely on during the period they would have otherwise worked.

Contract Type

In Europe, several types of employment contracts exist, including permanent, fixed-term, and temporary contracts. It is essential to understand the terms of your contract type, as they can impact your entitlements, such as notice period and severance pay.

Dispute Resolution

In the event of a dispute with your employer, the contract may include a dispute resolution clause outlining the process for resolving conflicts. Understanding the terms of this clause is essential to protect your rights and ensure a fair resolution of any disagreements.

Salary and Benefits

Employment contracts should outline the employee's salary and additional benefits, such as health insurance, pension, or vacation days. Understanding your salary and benefits entitlements and negotiating them before signing the contract is essential.

Working Hours

The working hours clause specifies the number of hours the employee is expected to work and any overtime-related rules. A lack of understanding about working hours can lead to employees working longer than expected, impacting their health and well-being.

Holiday Entitlement

The holiday entitlement clause specifies the number of days of paid holiday to which the employee is entitled. A lack of knowledge about holiday entitlement can result in employees not taking the appropriate time off and suffering from burnout or other health issues.


Overall, a lack of knowledge about contract terms can leave employees vulnerable to unexpected termination, legal action, or other negative consequences. It is essential to thoroughly read and understand the contract before signing and seek legal advice if necessary. Employers also have a responsibility to ensure that employees understand the terms of their agreements and provide support and guidance as needed.

For Paylab.com, Aurora Heidrick

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