Useful tips from our expert partner EmployEase
Discover below the tips to negotiate your terms of employment by Julie Calleux, our expert partner © Employease: The Employment Practice Ltd 2017
“I am often involved in negotiating terms of employment for new employees. I imagine job offer negotiations are a little like the discussions you would have when negotiating a prenuptial agreement. The recruitment process was the courtship and both parties are looking forward to a bright future. The manager trying to woo the new employee with promises to get their chosen partner to say yes. Human Resources and the legal department are like the fiancé’s parents protecting the family assets.
Difficult though it can be to contemplate, a thorough discussion to negotiate your terms of employment can go a long way to help you understand both parties’ obligations and what would happen should something go wrong. This makes even more sense if you accept that a relationship with an employer is unlikely to last a lifetime – the chances are that it will end and proper planning can go a long way to avoiding some of the animus that can accompany any split.
Few relationships, whether in the workplace or outside it, are truly a union of equals, and not every employee will be in a position to negotiate the terms of their new employment contract. When negotiating terms you need to be aware of your bargaining power, people at the beginning of their career or joining the market after a long gap have less clout than those at a senior level, or with rare skills, or who are being headhunted.
Why negotiate the terms?
There are a couple of very good reasons to negotiate your terms of employment.
Unlike marriage which normally gives each spouse equal rights to their loved one’s assets from day one, an employee with less than two years’ length of service enjoys relatively few employment rights. Unless you can prove discrimination, whistleblowing or other less common claims, your main protection before you reach your two years’ length of service will be your contract of employment. It may also be the case that you require a particular benefit that is not one your prospective employer normally offers. Be prepared to explain why you want it if it’s important to you, and you may be able to persuade them to your way of thinking.
The chances are you are leaving a job in which you may be settled, which pays well and which you are only contemplating leaving because the terms and challenges being offered are more attractive. It is vital to ensure that these inducements are put down in writing in a manner that you’re happy with before you make a decision. To ensure this you need to get into the nitty gritty.
Ask for the contract of employment
A job offer will set out the basic terms; position, start date, remuneration, benefits, holidays etc. Offer letters generally don’t include any detail. Before accepting the offer, it is a good idea to ask for a copy of the proposed contract, because that’s where you will find the detail.
The contract of employment will contain the things that the manager might rather not discuss for fear of scaring you off – all the things included by HR and the legal team to protect the company, not you. For instance, you may find your contract includes terms that are not mentioned in the offer letter, such as restrictions on what you can do after your employment ends, or deletion of Linkedin contacts on termination. Another common example is the offer letter included an entitlement to a bonus, but in the contract, the bonus is actually discretionary. For this reason it is vital that you review the contract and if necessary have it looked at by a specialist employment lawyer. They will spot potential pitfalls and hopefully head off anything that could come back and bite you in the future.
It’s important to remember that once you sign the job offer and resign from your current role, your negotiating power pretty much disappears, you therefore need to settle on the terms of the contract whilst you are still in a position to walk away if the deal doesn’t meet your needs or expectations.
Equivalents in benefits
Check through the new contract and compare the benefits between old and new company. It would be unusual for anyone to willingly move and accept conditions that are worse than those currently enjoyed (although there may be very specific situations when you might). Make sure you’re moving forward.
Beware of the “whole agreement” clause, ensure the job offer is reflected in the terms of the contract
Most contracts of employment contain a clause stating: “this contract replaces and supersedes all prior written and verbal agreements”. In plain terms that means do not rely on anything that your future manager promised you, the legal team has the final say.
It is not unheard of for the juicy inducements that were made in the job offer to disappear or change substantially when you receive your contract. You need to ensure that they are still there and again legal advice can be invaluable in making sure that what is written means what you think it does. If the terms in the contract are not what you expect, then discuss it before you commit. This is the best opportunity you will have to get what you want, use it.
I regularly talk to employees who were promised a particular benefit which was not reflected in the contract and subsequently the benefit was not provided. This is a particular problem with offers of membership of share option schemes that subsequently never transpired. It is vital to make sure that the contract expresses everything you expected and on terms largely similar to your expectation.
Can you negotiate out of the probationary period?
The notice period during your probationary period can be as short as one week. This would be the extent of your entitlement as opposed to the several months’ notice that applies after the end of the probationary period. You may be able to negotiate a longer notice period during the probationary period or even have the probationary period removed entirely although this may depend on just how badly the company wants you and the seniority of your new position. Typically, the more senior the role, the less relevant is a probationary period.
With some terms, you may find that the response is ‘this is company policy’. The use of a probationary period is one of those terms. It can be very hard to help your new employer move off this position, so be prepared to compromise. If it’s company policy that every new hire serves a probationary period, they may be willing to reduce the period and increase the notice but they may refuse point blank to remove it altogether.
Can you negotiate a sign-on bonus?
You may be able to arrange a sign-on bonus if the company wants you as a matter of urgency and you stand to lose bonuses or other benefits by leaving your current job at short notice. Again it is critical that any such agreement is put clearly in writing before you make your move.
Negotiate the restrictive covenants
If the relationship doesn’t work out, you will want to be as free as possible to start a new life as soon as possible. I often see negotiations around restrictive covenants, where the aim is to remove them entirely or to ameliorate their severity. There are no hard and fast rules here and the outcome may depend upon how much stock your new employer puts on these types of protections. Your seniority or your ability to damage the company on departure will have an impact on the operation and relevance of these clauses.
This note does not constitute legal advice on any particular situation you may have.