Got a contract offer from an MSP? Don't sign it until you've checked every clause on this list.
These are the 12 most common red flags we've identified across 1,769 contract comparisons and 276 MSP profiles on The MSP Playbook. Print this. Take it to your meeting. Check them off one by one.
β 1. Unlimited Overtime Clause
What it says: "Employee agrees to work additional hours as reasonably required to meet business needs."
Why it's a trap: "Reasonably required" is not defined. In practice, this means on-call rotations, weekend deployments, and after-hours migrations with no additional pay.
What to counter with: "Additional hours beyond 38/week to be paid at 1.5x base rate, with a minimum 2-hour call-out. No work during scheduled leave."
β 2. Restraint of Trade (Non-Compete)
What it says: "For 12 months after termination, employee shall not work for any client of the company."
Why it's a trap: MSPs have hundreds of clients. This can effectively ban you from working at ANY company the MSP has ever done business with β including your next employer.
What to counter with: "Restraint limited to 3 months and only to client accounts the employee personally managed in the last 6 months."
β 3. Training Repayment (Golden Handcuffs)
What it says: "If employee resigns within 24 months, they must repay 100% of training costs."
Why it's a trap: Training costs are unilaterally defined by the employer. A $500 Microsoft certification suddenly becomes a "$5,000 training package" when you try to leave.
What to counter with: "Training repayment is limited to certification fees only, and is pro-rated monthly over 12 months. No charge for internal training."
β 4. Intellectual Property Grab
What it says: "Any work created by the employee during employment, including outside work hours, belongs to the company."
Why it's a trap: That side project you built on weekends? The open-source tool you contribute to? Your personal blog code? The MSP can claim ownership. We've seen this enforced.
What to counter with: "Schedule A lists pre-existing intellectual property. Work created outside business hours, on personal equipment, and unrelated to company business remains the employee's property."
β 5. Garden Leave with No Pay
What it says: "Company may place employee on garden leave during the notice period."
Why it's a trap: Doesn't specify whether garden leave is paid. Some MSPs use this to put you on leave with no pay while they find a replacement, effectively extending your notice to 3-4 months.
What to counter with: "Garden leave is paid at full salary + benefits. Maximum garden leave period is 4 weeks."
β 6. Discretionary Bonus (The "It Depends" Trap)
What it says: "Bonus is at the company's sole discretion based on performance and business results."
Why it's a trap: "Sole discretion" means they can give you zero and you have no recourse. We've documented cases where promised $15k bonuses became "$1,000 thank you" at year-end.
What to counter with: "Bonus structure and targets will be documented in writing before the end of Q1 each financial year. Bonus to be paid within 30 days of year-end."
β 7. On-Call Without Compensation
What it says: "Employee may be required to participate in an on-call roster as part of their duties."
Why it's a trap: If "part of your duties" means it's included in your salary, you could be working 24/7 coverage for the same base pay. During major incidents, this can mean 60+ hour weeks.
What to counter with: "On-call rotation averages no more than 1 week in 4. On-call allowance of $X per week, plus minimum 2-hour call-out at 1.5x rate for any after-hours work."
β 8. Restrictive Notice Period (You-Only)
What it says: "Employee must give 3 months notice. Company may pay in lieu of notice."
Why it's a trap: Notice is asymmetrical β they can pay you out and have you gone today, but you're stuck for 3 months. During those 3 months, they can make your life miserable.
What to counter with: "Mutual 4-week notice period. Company may pay in lieu but must pay the full notice period."
β 9. Unilateral Contract Changes
What it says: "Company may change the terms of this agreement from time to time."
Why it's a trap: This allows them to cut your salary, change your role, or move you to a different location with no consultation. One MSP used this to drop an engineer's salary by 20%.
What to counter with: "Any material change to salary, role, location, or responsibilities requires mutual written agreement."
β 10. Non-Disparagement (The Muzzle)
What it says: "Employee shall not make any negative statements about the company."
Why it's a trap: This can prevent you from leaving honest reviews on Glassdoor, Seek, or The MSP Playbook. Under Australian law (C2026/6670 precedent), broad non-disparagement clauses can be void if they suppress legitimate workplace feedback.
What to counter with: "This clause does not apply to honest reviews on public platforms, reports to Fair Work, or whistleblower disclosures."
β 11. Rate Card Lock-In
What it says: "Employee acknowledges their charge-out rate is $X and agrees not to dispute the margin."
Why it's a trap: The MSP charges clients $150-200/hr for your work. If you're on $70k salary, that's a $200k+ annual margin. Locking this in writing removes your ability to negotiate based on the actual value you deliver.
What to counter with: "Remove this clause. Salary negotiations will be based on market rates and performance, not charge-out margins."
β 12. The "Miscellaneous" Trap
What it says: Clauses hidden in "General Provisions" like arbitration requirements, reduced limitation periods, or jurisdiction clauses that force disputes to be heard in a different state.
Why it's a trap: These bury critical rights. A 12-month limitation period instead of the standard 6 years means you lose the right to sue after 1 year without realising it.
What to counter with: "Read the entire document β including every schedule and appendix. Cross out or initial every page."
How to Use This Checklist
- Download/print this page before your contract meeting
- Take a highlighter to your contract
- Check each clause against this list
- Negotiate the ones marked with red flags
- Get everything in writing before signing
Remember: A contract is a negotiation, not a take-it-or-leave-it document. In the current Australian IT labour market, skilled engineers have leverage. Use it.
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This checklist is based on analysis of 1,769 contract comparisons submitted to The MSP Playbook. Always seek independent legal advice for your specific situation. This is information, not legal advice.
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