Negotiate your future with your job contract
NEGOTIATING an employment contract, whether you’re about to start a new role or renegotiating an existing package, can be a daunting prospect.
Receiving a job offer brings mixed feelings for most people, as many agonise over the terms of the offer and whether to take the plunge into negotiating a better deal. Others are so pleased to receive the offer they simply sign on the dotted line without considering the terms.
When you’ve been offered a new job, the last thing you want to do is read through the small print and negotiate terms. You may feel that doing so would risk jeopardising your relationship with your new employer. However, if you don’t, you may come to regret it. The detail of your contract is very important – especially when the relationship comes to an end.
The negotiating process can leave an employee in a better position. Businesses expect to engage in some sort of negotiation. If you don’t believe in your worth and the value you will bring to the job, why should the employer?
There is always room for negotiation and while some terms may not be flexible, many are.
The major areas for negotiation, apart from the obvious like basic pay and holidays, include bonus terms, benefits, notice provisions, and restrictive covenants (which restrict you from competing with your employer after you leave).
BONUS TERMS
Most bonuses are discretionary under FSA rules, and there is little that can be done about this. However, payments can be negotiated to compensate for any stock left behind (although the FSA states that this payment must remain deferred to remove any incentive to change jobs).
You need to look at the conditions attached to this payment – sometimes employers will specify that it can be clawed back if you leave within a certain period. You need to make sure that this claw-back will apply only if you leave voluntarily or are dismissed for gross misconduct – and not, for example, if you are made redundant.
But what happens to the bonus when an employee leaves? The typical position is that bonuses are only payable if you are still employed and not under notice at the time it is due. However, this can be negotiable, and it is particularly appropriate to do so if you are in a sales role and the bonus represents commission on sales.
BENEFITS
Other ways to enhance the package, if your salary is fixed, could be share options and pensions. These are tax efficient ways to improve a position. But ensure that benefits are maintained in any clause dealing with payment in lieu of notice. Your employer will often be seeking only to pay salary in lieu of notice, and not take into account wider benefits.
NEGOTIATE NOTICE
It’s important to think about negotiating on notice period. While a notice period of between one and three months would be fairly typical, employers do propose longer or shorter periods.
Don’t accept a term that requires you to give more notice to your employer than it is required to give to you. Longer notice periods often tend to favour employees but they can operate against you if your employer wants to keep you away from a competitor when you leave, especially if the employer operates a garden leave clause.
RESTRICTIVE COVENANTS
As well as notice, clauses like garden leave and restrictive covenants should also be considered. Typical clauses would restrain you for a certain period from competing with your employer, trying to poach clients, dealing with clients whether you poached them or not, and trying to get colleagues to come to your new employer with you.
The general rule is that such clauses are only enforceable if they are reasonable, and go no further than necessary to protect the legitimate interests of the business. But they are often enforced by the courts. It is very easy, when joining a new employer, to overlook what will happen when you leave. But unless you are planning on staying until retirement, this is the likely scenario. By then it will be too late to negotiate the covenants, which could prevent income for perhaps six or 12 months.
The time to negotiate your employment contract is prior to your employment commencing. This is a very complex area and you should always obtain specialist advice. It can pay huge dividends when you leave.
Matt Gingell is a partner at Gannons Solicitors.