Employment Contract Review — Read the Offer Before You Accept

What to check in a job offer: the non-compete, how your bonus can be clawed back, what happens if you leave, and who owns what you build.

Compensation Structure and Financial Risk

An employment contract defines not only your base salary, but also how bonuses are calculated, how equity vests, what happens upon termination, and whether compensation can be clawed back. Small wording differences can materially affect lifetime earnings.

Salary clauses often appear straightforward, yet ambiguity hides in definitions of performance metrics, discretionary bonuses, and timing of payouts.

Example: A bonus tied to “management discretion” or “subject to company performance” removes objective payout obligation. Even if targets are met, the employer may retain unilateral decision authority.

Ambiguous performance or KPI definitions
Bonus subject to discretionary approval
Equity forfeiture upon voluntary resignation
Clawback provisions tied to internal policy updates

A careful employment contract review should quantify how these clauses affect total compensation, not just monthly salary.

Equity Compensation and Vesting Traps

Equity grants (stock options, RSUs, phantom shares) frequently contain technical language that determines real ownership value. Vesting schedules, acceleration triggers, and termination definitions directly affect financial outcome.

Vesting Risk: If termination occurs “for cause,” unvested equity may be forfeited immediately.

Acceleration Clauses: Change-of-control provisions may accelerate vesting — or may exclude partial acquisitions, leaving employees without expected protection.

Equity clauses should clearly define cause, good reason resignation, and post-termination exercise windows. Ambiguity in these areas often leads to disputes.

Termination Rights and Career Mobility Risk

Termination provisions determine severance eligibility, notice requirements, and ongoing restrictions. Definitions of “cause” are particularly critical, as they influence equity retention and post-employment benefits.

Broad “Cause” Definitions: Language including “any policy violation” or “conduct deemed harmful to the company” may allow discretionary termination without severance.

Non-Compete Scope: A 24-month restriction covering an entire industry or geographic region can significantly limit future employment opportunities.

Non-Solicitation Clauses: Restrictions on contacting former clients or employees may indirectly restrict entrepreneurial activity.

Non-compete enforceability varies by jurisdiction, but signing the clause still creates negotiation and legal risk.

Intellectual Property and Side Project Ownership

Employment agreements frequently include IP assignment clauses covering “all inventions conceived during employment.” Without carve-outs, this may include personal side projects unrelated to the employer’s business.

Ownership of pre-existing intellectual property
Side projects developed outside working hours
Open-source contributions
Future inventions “related to company business”

Clear exclusions and disclosure schedules help prevent unintended transfer of ownership.

What an Employment Contract Review Should Cover

A meaningful employment contract review should assess financial predictability, termination balance, restrictive covenants, and ownership risk.

Whether compensation metrics are objective and enforceable
Whether equity vesting and acceleration terms are clearly defined
Whether non-compete restrictions are proportionate in scope and duration
Whether IP assignment language contains appropriate carve-outs

PlainTerms analyzes employment agreements clause by clause, identifying compensation ambiguity, restrictive covenants, equity risk, and termination imbalance. The focus is a clear view of what you are agreeing to before signature — not generic summarization.

Analyze Employment Terms Before Signing

Salary structure, termination rights, non-compete restrictions, and equity clauses directly impact career mobility and long-term financial outcome. Identify imbalance before committing.

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Frequently Asked Questions

Focus on compensation and bonus conditions, termination and notice terms, non-compete and non-solicitation restrictions, intellectual-property assignment, and any clawback or repayment obligations. These clauses decide what you actually take home and what you can do after you leave.

Employment contracts are drafted by the employer's counsel and often include broad IP assignment, restrictive covenants, and at-will or for-cause termination language that heavily favors the company. Signing without review can limit your future job options and forfeit compensation you assumed was guaranteed.

Yes. PlainTerms highlights non-compete scope, IP assignment reach, bonus conditions, and termination triggers, scores their risk, and explains in plain language what each clause means for you before you sign.

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