Today, companies routinely require employees to sign a hiring agreement that attempts to reduce or in some cases even eliminate important rights. Unfortunately, too many employees are not willing or capable to negotiate these terms or have the contract properly reviewed by a lawyer. But for employees, an ounce of prevention is worth a pound of cure. If you are given an employment contract, first pause and consider the following advice:
No duress: It is customary to receive at least several days to review a new job offer made in writing. However, unless you are being threatened or coerced, it does not amount to duress if you are given less time than what you feel is fair. If you do not have sufficient time to consider the terms or to get advice then state that to the company and do so in writing. It is better to ask for an extension than to sign off and gamble that the contract could be disregarded.
Probation: Contrary to popular belief, new employees are not on probation unless a contract makes that so. Therefore, when I represent employees in contractual negotiations, this is the first clause I seek to remove, especially if you are leaving one job for another.
Overboard drafting: In too many scenarios, employers take the “kitchen sink approach” to drafting employment contracts. They include excessive protection, no matter how junior or administrative the employee. But the more they ask for, the less likely a court is to enforce the terms. This is especially true for restrictive covenants, such as a non-compete. Therefore, depending on the language of the clause, sometimes I counsel employees to sign contracts with clauses that I know will never be enforced, rather than to point that out to the employer through attempting to improve or circumscribe the terms.
Illegal severance terms: Many employers foolishly use old contractual precedents or rely on a novice to draft important severance limiting language, often with little regard to the current nuances of the law. Fortunately, for employees, this can defeat the purpose of these clauses altogether. If a severance clause does not at least comply with minimum employment standards legislation, then it is illegal and a court must void it.
Ambiguity: I often see disputes about the meaning of a particular phrase or term of an employment contract. This usually has to do with whether one side or the other is entitled to some form of compensation. There are two rules here to remember. First, any ambiguity is interpreted against whoever wrote the contract. Since almost all employment contracts are written by companies or their lawyers, uncertainty will be construed against them. Second, for the same reason, if you are the one insisting on a particular clause to ensure you receive some form of compensation or payout, then make sure that the wording is clear.
Timing: What if a contract is provided to you after your employment begins? Unless you are offered something you did not already have in exchange for signing that contract, then it is invalid. This can be a great opportunity for you to negotiate improvements to the contract that you may have otherwise left behind.
Signatures: Sometimes employees conveniently forget to sign the hiring agreement with the hopes their employer fails to notice. It does not matter. All the employer must show to enforce these hiring agreements is that you received the offer and elected to start working without protesting the terms.
References: Too many employees lose their new job offer because a reference did not check out. The problem is that some of them already resigned from their previous job in anticipation of starting the new one. An offer may not be firm until a background check or reference check is either waived or satisfied. The golden rule is never to resign from your current job until your new offer is binding.
Negotiations: In my experience, the No. 1 reason why employees fail to negotiate contracts is a fear that the employer will withdraw the offer altogether and move on to the next candidate. But this seldom occurs. It’s possible the employer will say no, but far less likely they will retract their offer.
Ironically, most of my clients feel comfortable asking for an extra week’s vacation or a slight bump in pay. If they have this amount of courage, then they should have no problems negotiating some of the fine print. The key from an employee’s perspective is appreciating what he or she stands to lose by agreeing to the employer’s language. If the clause the employer inserted is an attempt to provide far less than what is considered fair, then do not be reluctant to try to improve the terms.