Here in the Philippines, we pride ourselves on being honest, trustworthy, and ethical. As such, we tend to assume the people we interact with and the companies we work for have our best interests in mind. Most of the time, we rely on verbal agreements. Even when we lend money to someone, a verbal agreement gets the job done. Most of us are not really huge believers in written contracts, even knowing that it makes us unaware of the future consequences that might lie ahead. So, when you are excited to start a new job and the employer who so graciously hired you sends you a long employment contract, you simply sign the contract right away out of excitement. But the million-dollar question is, did you read what you just signed?
As the Head of Human Resources for more than a decade, I want to share my knowledge about the type of employment contracts, the list of issues about employment contracts, and things you should know before signing a contract.
When applying for or accepting a new job, you can’t rely on assumptions and verbal agreements anymore. Historically, employers in the Philippines have had immense power over employees in employment negotiations. By leveraging this power, employers have been able to put demands on new employees that unfairly limit their ability to grow as professionals. But times have changed. Employees now have more power in employment negotiations, yet the power dynamic has remained unchanged, with companies sticking to their unfair practices. I’ve been working as an HR in the industry for quite some time now. I’ve seen it all. My friends and family look at me as their walking encyclopedia when it comes to matters relating to employment contracts. Of course, I do my part in guiding them, but sometimes they ask for advice when it’s already too late because they’ve already signed. Contracts, in general, may seem to be the most boring document in the world to read, especially when you’re so excited to start a new job. As they say, you should “grab the opportunity right in front of you!” and while that’s true, the best way to go is to hold hands with the opportunity, get to know it, and when you’re totally convinced, then and ONLY then do you commit to it. Yes, your employment contract is just as serious as getting married.
Throughout the years, I’ve made a list of issues that made me want to cringe at employment contracts that obviously didn’t know the second tenet of the Four-way test— Is it fair to all of those concerned? As a head of Human Resources, you may think that I am pro-management, which I am, but it does not mean I will lead at the expense of others. And that is why there is this thing called an “Employer-Employee Agreement”. A contract wherein both the employer and the employee have mutually agreed on the rules of engagement. Aside from looking at your pay grade, here are many things you should know before signing your contract.
The Employment Contract
There are many types of employment contracts presented in job offerings. It could be probationary, regular, project-based, independent contracting, or whatever they call it nowadays. The type of contract usually determines the tenure an applicant will have in the company. For the basics, you should make sure that the following items are presented clearly in the contract:
- Deductions of Mandatory Benefits such as SSS, PHIC, HDMF & Taxes
- Salary per month, day, or project
- Frequency of payment release (e.g., the weekly, semi-monthly, monthly, and end date of the project)
- Allowances per month, if available, should be clearly stated. (Bonus: you can ask if the amount is taxable or not)
- Working arrangements (e.g., 5 days a week with 2 days off, 6 days a week with 1 day off, shift, start date)
- Position in the company
- The termination or movement process depends on the type of contract.
- Amount of time necessary to give notice of termination.
- Other benefits, if applicable (e.g., paid leaves, HMO, parking, shuttle service)
Those items above are the basics you should look out for in your employment contract. Again, make sure those are presented clearly, and when in doubt ask for clarification. In the 2nd part series, I will debunk what Training Bonds, Incentive Programs, NDA’s and Termination clauses are and give the final takeaway that helped many!