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When it comes to contract review, people don’t always ask how often their contracts should be reviewed. A lot of times, when a contract is signed between 2 parties, rarely do they revisit it again sometime in the future. However, this can be problematic in the sense that it can cause a lot of legal problems between 2 parties. 

At the same time, we should also mention that by “contract” we also mean the kinds of contracts and agreements signed between 2 different parties. It does not necessarily limit to just employment contracts. 

Instances Where Employers Review Contracts 

Instances Where Employers Review Contracts
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Examples and instances where contracts need to be reviewed periodically may differ. Below are some scenarios of how and why contracts need to be reviewed every now and then. 

  • The employee is a contract staff. Their contract may be for the period of quarterly (3 months), half-yearly, yearly, or for varying months. It depends on what is written in the contract signed between the employers and the employees. In some contracts, it may include a clause saying something along the lines of “contract period may be subjected to renewal based on employers’ discretion”. This is between the employer and the employee whether the contract will be renewed eventually. 
  • The employee is past retirement age already and is still working for the company. In a lot of countries including Malaysia, when you reach a certain age (usually retirement age or past 60 years old), you will be put on a contract basis. Most times, if not all, these contracts will be reviewed – typically every 2 years or so, unless stated. 
  • Alternatively, some employees may have been working in a company for many years – typically 10 years or more. Their roles may or may not have changed. Let’s say they did change roles in the company. For obvious reasons that are their own, the employee’s contract would have been reviewed during those points of time. 
  • Working in different types of companies can also determine the employees’ contract review. Let’s say an employee may work in a corporation. Corporation laws tend to move and actively change periodically. With that being said, it means the company will have to actively monitor and review the employee contracts periodically too. 

The reasons can vary. The above list is just some of the more common reasons why employers review contracts. 


How Often Do Employers Review Contracts?

How Often Do Employers Review Contracts_
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How often do contracts get reviewed depends on the nature of the job and the person’s role in the company. Here is a general idea of how often contracts are reviewed by different companies. 

1. Every 2-3 Years 

Not a lot of companies review their contracts every 2 years. However, it’s common to find contracts that get reviewed every 2 years on contracts that are for long-term contracts. Some agreements between employers-employees or companies-companies maybe for more than 5 years. This is more common for contracts between 2 companies when one hired the other for their services. That is why the companies may need to review the contracts periodically before the agreement tenure is up. 


2. Annually (Every Year) 

Yearly reviews are commonly found between employers and contracted staff. These types of reviews are usually the most common of all that’s been listed here. However, that does not mean non-contract staff and other agreements don’t get reviewed annually. For contract staff, usually, the employers will see if they wish to continue their services or not. If the employers do, then they may either offer another contracted agreement or absorb the employee as a full-time or permanent staff.

Sometimes, a yearly review may mean the employers will access the employees’ performances. KPIs remember? We are sure you know where this is headed for. The employers will generally see if the employee’s KPIs are in tip-top performances, hence bonus payouts. 


3. Half-Yearly 

Half-yearly reviews are for people working in fast-moving companies. Usually, in a short period of time, a lot of things can happen in a company. Employees will need to be reviewed a lot more often than usual. 

Sometimes, half-yearly contract reviews can be applied in situations where it involves frequent large amounts of money. Companies and employers will need to take into account nothing escapes their attention and oversight. Hence, the half-yearly contract review. 


4. Quarterly 

Quarterly contract reviews are often seen as the most ideal contract reviews of all that we have mentioned so far. This gives the company more time to look into the ongoing projects in-depth and provide better insights. It’s also necessary for budgeting and reporting purposes too. 


5. Monthly 

This is perhaps the least popular contract review companies will go for. This is mainly because monthly contract reviews are simply just too much work to handle. Moreover, it’s hard for companies to always be there reviewing the contract every single month. For some companies, just what are there to review in contracts if it were to be done every month? That’s why most times employers and companies will usually go for quarterly contract reviews at the very least. 


What Kinds Of Entities Get Periodical Contract Review?

What Kinds Of Entities Get Periodical Contract Review_
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When it comes to contracts, we will say it again. By contract, it does not necessarily mean just employment contracts. It can also mean and include agreement contracts between companies (business/trade contracts), non-disclosure and privacy agreements (NDA), website agreements, software licenses, and so on. 

Business agreements should be pretty straightforward. In these kinds of agreements, the contract usually includes the services exchanged between 2 or more companies. It can also include the agreed payment and the period the service should be carried out. 

Non-disclosure and privacy agreements are contracts that are more commonly found in corporations, law firms, and similar sectors. Again, this is pretty straightforward. These kinds of contracts usually include privacy statements where whoever signs it should never leak private information. 

There are also software licenses. In software licenses usually, the company will have to review and access the new version updates. The software licenses have to be “on par” with the latest updates. 

Property and equipment leases also get reviewed periodically. Usually, before you renew your property rent, you will review if anything is in good condition before doing the renewal. It’s the same for equipment leases. 

There are many more types of agreements and contracts that get reviewed periodically. The above-mentioned is just some of the most common ones you can find. 



The bottom line is that most, if not all contracts will usually get some kind of review periodically. Not a lot of contracts not get reviews as situations change. Situations don’t always stand still forever. Contract reviews are great in the sense that it re-visits old and existing contracts and improved and updated with the present time’s necessities.