Lets look at that contract

What you need to know before signing on that dotted line.



Almost any job that is in a career track, at any level, comes with a contract. Here we will look through the basic contract elements, how these affect your end of year bottom line and how to figure out exactly what you should be looking for in a contract for you.

Basic Salary

Always the first port of call. Just what is this position paying and what does that mean to you at the end of the year? First step is to calculate your expenses (SEE Expenses post). This is your floor price to survive. Add to this what you would like to be saving and you can figure out a picture of where you need to be, at a very minimum. Does the basic salary cover this? After that, it then becomes about expected lifestyle, work load and effort against income, how much extra you could save, etc.


Many roles carry a commission style structure now in line with KPI’s (Key Performance Indicators) with the classic being ‘sales against revenue’ targets. Here is where the work load and effort against income really comes in to play. If your targets are deliberately high and almost unattainable then you need to know this as quickly as possible. Also, don’t be fooled by the recruiters talk of an OTE (On Target Earnings) salary. You need to base all of your assumptions around the basic salary and have commission as an added extra. Sales companies want you to work hard by squeezing out as much effort from you as possible and they will do this with an attractive commission – if you can ever get there.


This can be something small like a gift voucher, a quarterly cash bonus or a yearly presidents club holiday. This should be taken as its name sake – a bonus. If it can get you a few extra € every few months, then that’s great. If it can save you the cost of a holiday once a year, then even better. This can help to whittle down expenses and allow for greater savings but should not be factored in to your basic living expenses as there is no guarantee you will get this.

Health Care

Often overlooked, but so important. If you are not covered in the case of an illness or injury, then you have opened yourself up to wiping out any potential savings this year. If you get in to an accident, get severely ill or have to spend time in hospital for any reason then you are going to see a very unattractive bill coming your way. This can be mitigated against by having suitable health insurance in place. Many companies offer a corporate scheme or a subsidized health care, whilst others offer full health care as a part of the package.

Pension Contributions

Invest in your 401k or ROTH IRA or whatever pension scheme you are paying in to. Match employer pension contributions up to the maximum they offer. Matching contributions is giving you a 100% increase in the value of that money going forward. You can’t say better than that. Employers tend to limit this to a certain amount each year. Find out what that is if its not stated and begin looking at this early. If you want to invest in your own business at some stage, this gives you a relative assurance that later in life, you won’t be stuck regretting the decision and broke.

Intellectual Property Rights

Many companies have a caveat in their contracts that says anything you invent, create or come up with whilst you work for their company will be their intellectual property. This can be very binding and you should consider this in line with your skill set and how this might impact you in future endeavors. Find out the scope for this as it may be industry specific, it may be a profit share situation with the company or it may be time limited. A bad example of how this can affect you is McDonald’s. The Big Mac, Fillet-O-Fish, hot apple pie and the Egg McMuffin were all created by McDonald’s employees. All they got was a plaque for their efforts and never gained any royalties or on-going earnings for their creations (you can read about that here).

Travel Expenses

This will typically only come in to play when you are out of office for work quite a bit. This could be an area manager role, a field sales representative role, etc. Here you will get a fuel card and perhaps some sort of daily allowance for food. This is a fairly limited area but those few euro towards your lunch, and with many companies overpaying on mileage costs to help with wear and tear and the such, can help to cover any unexpected expenses.

Non-Compete Clauses

If you work for 5 years in an industry and become very good at your job but cannot work in that industry for 12 months after leaving your current employer, then your career prospects take a giant nose dive. This needs to be considered and you should ask a lot of questions around this area if it is in your contract. Does it mean you can’t start up your own business and go after their clients, or does it mean you can’t work for one of their competitors? Normally it’s the former if it is a smaller business but be sure.

This is the basics and many contracts will have other clauses or specialist areas depending on the field you go in to. One last note is always take the contract you have as the last contract you will get. The lure of a future better contract may never come as recruiters are sales people and are just trying to sell you a job. If you are happy with that then you should be fine.

“I have made lots of mistakes in terms of contracts and spending money when I shouldn’t have spent money.”
Jenson Button

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