Employment Contracts – learn more

Date: Tuesday, October 18, 2011
Author: Daniel A. Lublin
Publication: Globe and Mail
Question: If I plan to move to another company, I would like to know what I should negotiate in terms of severance package, besides the salary. I understand that one week for every year of service is typical but I understand some have successfully negotiated for more. Also, what other items can be typically negotiated with employers beyond salary?
Answer: The biggest mistake you can make when changing jobs is to agree to an unfavourable employment contract. You will quickly become the easiest employee for your employer to demote or get rid of, which means that you will have the least job security.
Employees make bad deals on employment contracts because they do not realize their interests are being undermined, or because they believe they do not have the bargaining power to negotiate more favourable terms. Whatever the reason, beware of the modern employment contract because it will come back to haunt you later on.
Despite what they will tell you, employers draft employment contracts to protect them, not you. Therefore, you have to be alert to some of the more punitive terms. These include terms surrounding probation, which allows an employer to quickly dismiss you without pay or notice for reasons that would otherwise be insufficient. This is an absolute “no” clause for anyone leaving one company to join another.
A “termination clause” will usually provide you with less severance than you are otherwise entitled to. For example, many contracts now state that the employer can end the relationship by paying only the severance required by legislation. People mistakenly believe this is fair because it meets the statutory requirements. However, this language actually limits your right to severance. If your contract said nothing about termination, you will almost always be entitled to far more severance than the minimums found in the relevant legislation so these clauses do not protect you, they harm you.
“Contractual changes” are clauses that permit an employer the right to make virtually any change to your job, such as a demotion or reassignment, which they otherwise could not do. In one recent contract that I saw, the employee unknowingly agreed that his employer could relocate him to another city, which it otherwise could not do without triggering a constructive dismissal.
Post-employment restrictions are clauses that prevent you from working for a competitor, working in your industry or soliciting clients or former colleagues upon your departure. Without this language in a contract, your only obligation upon leaving is to keep information or trade secrets confidential, and yes, courts will enforce these clauses if they are drafted properly and somewhat reasonable.
What should you do? Review any new contract with a lawyer and don’t be reluctant to renegotiate terms. Like any other contract, employment contracts are negotiable so don’t just accept them “as is” unless you absolutely have to.