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I am in the EU and I recently got a job offer for a remote role from a games developing startup. A service provider agreement will facilitate the role. The contract however is full of very high financial penalties(tens of thousands of euros) on several breaches (of confidentiality or non competition f.e.). It also says that I will be liable to the full amount of any damage caused intentionally or due to gross negligence. Is this a common practice? I have worked on big corporations and I have never faced such clauses. Can this be a scam of any kind?

Please note the role is not for a manager/director level but rather for a base software developer level. Also the clauses are very generic and I do not have idea how these can materialize f.e. how can the company loose money so I can be liable for it.

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  • In your previous jobs, were you an employee or a contractor? It sounds like maybe you're used to being an employee, and now you're going to be a contractor. From your question and ambiguous terms like "job", it's not clear if you're fully aware of the differences, which are many and significant.
    – Nate Eldredge
    Commented Dec 7, 2022 at 19:52
  • It also happens that companies will try to treat people as contractors, when they actually legally meet the definition of employees and should be treated as such. You probably want to talk to an employment lawyer to find out if this might be the case here.
    – Nate Eldredge
    Commented Dec 7, 2022 at 19:52
  • @NateEldredge you are absolutely right in all your comments. I am an employee and this is a contractor job. There is also a clause saying : 'No relationships of employer to employees are established hereby between the Parties'. However this is not true at all. I applied to them, I will request leaves from them and so on. What do you advice me to do?
    – Cap Barracudas
    Commented Dec 7, 2022 at 21:02
  • This site can't offer personal legal advice. The only advice I have is, as I said above, to talk to a lawyer (in real life, not via this site).
    – Nate Eldredge
    Commented Dec 8, 2022 at 2:55

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The contract however is full of very high financial penalties(tens of thousands of euros) on several breaches (of confidentiality or non competition f.e.).

I routinely write non-competition and non-disclosure agreements with such clauses, and see them in contracts written by others. They are called liquidated damages clauses and reflect the fact that proof of actual economic damages from a breach of confidentiality or prohibited competitive acts are difficult or impossible to prove.

This isn't particularly uncommon.

It also says that I will be liable to the full amount of any damage caused intentionally or due to gross negligence.

This sounds like the term may actually benefit you. The default rule is that you are liable for the full amount of any damage caused by your acts which are negligent, grossly negligent, reckless, intentional, or in bad faith. This clause seems to be exonerating you from liability for simple negligence.

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  • Liquidated damages are fine - the OP refers to penalties and these aren’t allowed. To be an LD rather than a penalty they must be a genuine and justifiable pre-estimation of the loss that would be suffered. Maybe tens of thousands of Euros is, but for a games programmer?
    – Dale M ♦
    Commented Dec 7, 2022 at 19:47
  • @DaleM Yes, these 'fines' are definitely not genuine and justifiable pre-estimations. For each breach no matter its nature I have to pay tens of thousands of euros.
    – Cap Barracudas
    Commented Dec 7, 2022 at 21:48
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    @CapBarracudas It's an issue that could easily go either way, depending largely upon the reasonably anticipated profitability of the company. Usually LD clauses are assumed to be valid unless the person against whom they are being enforced makes a good argument otherwise and even though it shouldn't matter doctrinally, a bit of procedural unconscionability analysis usually slips in, so a sophisticated professional who read and analyzed the contract and maybe asked about it is going to have a harder time challenging it than a warehouse worker who was told to sign and shut up.
    – ohwilleke
    Commented Dec 7, 2022 at 22:13

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