Are the terms of employment contracts negotiable? More often than not, the answer is yes. But it amazes me how many people tell me that they assumed that the proposed employment contract was simply a “standard form” agreement and just signed it – even when accepting fairly high level positions.
But I wanted to consider some more practical points. Some might seem obvious. But people holding a new job offer in hand don’t always think of everything that should be considered. While you may be anxious to sign the employment contract and start the new job, especially if you have been out of work for some period of time, you really do need to look at the contact closely. Not all of the terms are written in stone.
What items can be negotiated?
1. Salary. Well, of course this is not really a legal point. But most people realize that salary is negotiable. So I often have employees tell me that they negotiated up the salary level of a new position – but ignored everything else in the contract. Don’t assume that the salary is fixed. There may well be room to improve it. Most of the time, it can’t hurt to try.
2. Vacation and Bonus. In a sense, these benefits go hand in hand with salary. They are tangible items that an employer might agree to increase. Often, both items are subject to a grid or a plan. But I regularly see employers making agreements to increase vacation time at the request of a new hire – especially from two to three weeks or from three to four.
3. Severance. This is crucial. Even though it might seem like the last thing on the mind of someone who is about to be hired, it can be incredibly significant. Some employers will use clauses that drastically limit the amount of potential severance to be paid on a dismissal. Any clauses that say “employment standards legislation” or something similar should be questioned and considered. They might even be deal breaking clauses. As a result, employers will often negotiate these clauses. If they will not, you should get proper legal advice so that you understand the implications of signing away such important and monetarily valuable rights.
4. Non-Competition Agreements: People generally realize that these clauses are significant, even if they have not had legal advice. But I often hear employees telling me that a friend or family member told them not to worry because these clauses are rarely enforced and may not even be enforceable. While that advice might be true sometimes, it is not always the case. Signing a non-competition agreement – or even a “non-solicitation” agreement can greatly impact your future opportunities after leaving this new employer. These clauses are also often negotiable, particularly the proposed time period of the restrictions.
5. Probation and Benefits Clauses. Believe it or not, these too are negotiable items. If an employee is being recruited from another position, the potential employer may agree to waive a probationary period and/or start benefits right away. Sometimes a signing bonus can even be negotiated.
These are just a few of the points to consider. Competent legal counsel can often point out a number of different clauses in a proposed employment contract that are problematic or that should be considered very carefully. It may well be much cheaper, in the long run, to go through an employment contract review process at the outset than a legal battle at the end of a relationship. It is usually far worse to find out, after being dismissed, that a signed employment agreement has now left you with below-market severance, enforceable post-employment restriction and no real legal alternatives.
If the employer is reasonable and is genuinely interested in treating its employees fairly, it should be prepared to negotiate reasonable provisions in all of these areas and maybe some others as well.