Course Progress
Part of 4 Chapters
For Workers: Toxic Clauses in Employment Contracts A to Z
Chapter 2. For Workers: Toxic Clauses in Employment Contracts A to Z
The beginning of your professional life starts with signing a contract. However, if you ignore the fine print in excitement, you might find yourself unable to move to another job or facing unexpected penalties. Let’s look at the ‘Three Major Toxins’ workers must check.
1. “Pay to Quit”: Liquidated Damages and Penalties
This is one of the most common and powerful toxic clauses. It often looks like: “If you do not complete the mandatory 2-year service period, you must reimburse $20,000 in training costs.”
- The Principle: In many jurisdictions (like S. Korea), labor laws prohibit the pre-determination of penalties for a breach of contract.
- The Trap: However, reimbursement for actual costs like ‘overseas training’ or ‘signing bonuses’ may be recognized as valid in certain contexts.
- Checkpoint: You must distinguish whether it is a reimbursement of actual expenses or simply a penalty to bind the worker.
2. “Overtime is Free”: The Trap of All-Inclusive Wage Systems
This is a system where overtime, night, and holiday pay are pre-calculated and included in the base salary.
| Category | Normal Case | Signs of Toxic Clauses |
|---|---|---|
| Pay Calculation | Extra pay for actual overtime | Fixed amount regardless of hours |
| Job Nature | Jobs where monitoring hours is hard | Typical office jobs with clear hours |
| Minimum Wage | Must comply strictly | Often falls below minimum wage when including hours |
Warning: If you are in a typical office job with clear clock-in/out times but are working infinite overtime under the guise of an “all-inclusive wage,” it is likely a legal violation in many countries.
3. “No Working for Rivals”: Non-Compete Clauses
A promise not to move to a competing company for a certain period after leaving.
- Validity: Courts judge these strictly as they can infringe on the constitutional ‘Freedom of Choice of Occupation.’
- Criteria for Judgment:
- Is there a legitimate trade secret to protect?
- Was adequate compensation provided for the restriction?
- Are the period and geographical scope reasonable?
- Response: Clauses that ban job-hopping for 2-3 years without any compensation are likely to be found void in court.
4. Global Perspectives on Labor Law
Global Policies on Labor Contract Toxic Clauses
| Country | Non-compete Status | Termination System |
|---|---|---|
| USA (FTC) | Ban proposed federally | At-will employment focus |
| S. Korea | Void without compensation | Strict firing, free quitting |
| Japan | Strictly limited by precedent | Similar to Korea, cultural pressure exists |
| Germany | Mandatory compensation | Valid only if 50% of salary is paid during the ban |
Key Checklist
- In many countries, simple penalty clauses for leaving are legally void.
- Even under an all-inclusive wage, you can claim extra pay if actual hours exceed the pre-set limit.
- A non-compete clause is likely void if the company didn’t give you ‘special compensation’ for it.
- Always keep a copy of your signed employment contract (it’s often a legal requirement for the employer).