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Employers will often require new employees to sign an employment contract as part of the hiring process.  A good employment contract will clearly spell out job rules, requirements and expectations. These documents will dictate the terms of the relationship between the employee and employer and, in a perfect world, should protect both parties. That said, we do not live in a perfect world so the best way to protect yourself is to make sure you understand and agree to all terms prior to signing anything.

Depending on the terms of a given agreement, contract negotiation can be a very stressful process, especially if you aren’t comfortable with the art of contract negotiation. Just knowing that you can negotiate terms you don’t agree with is often a new concept to potential employees. I recommend always taking a contract home and reviewing it prior to signing.  Once you sign, the time for negotiation is gone.

First thing is to make a copy of the physical or electronic document so you can mark it up with notes.  As you read the contract look for anything that you do not understand or need clarification on.  Send these questions to the potential employer in writing (via email is most expeditious).  Then re-read the document looking for anything that you want to amend or contest.  You can do this by drawing a line through the text, adding amended text (if any), initially and dating next to the changes.  The potential employer may not agree to your changes and may further amend.  Then re-read again looking for anything that is missing.  These may be unique circumstance to you, such as, the rate of pay for customers you bring into the new work environment.

The process of negotiating a contract can sometimes become emotional.  It is good to try to avoid this.  It is simply an agreement.  If you cannot agree, then maybe that employment opportunity isn’t such a great opportunity!  It is never a bad idea to consult a lawyer prior to signing an agreement.

Here are a few points to consider when reviewing an employment contract:

  • “At will” vs. not “at will” – “At will” employees can quit or be terminated at any time for any reason (barring illegal terminations such as discrimination). An employment contract can spell out terms for resignation or termination, as well as length of contract.  For example, you may want to negotiate a 1 year contract term if you are being recruited to leave a job you like. Terms do not have to be the same for employer and employee.  The employer may have to give 60 days’ notice to terminate, while the employee may only be required to give 30 days’ notice before resigning. 
  • Vacation and sick day policies – Vacation and sick day policies can vary widely.  These policies can be a great perk to a job that otherwise is just okay.  Make sure to review the policies carefully and calculate the actual value of the benefit.  If you have a tradition of being unavailable for a specific holiday or your kid’s spring break, consider adding those dates as “unavailable to work” to your contract. 
  • Non-compete agreements – These can be one of the biggest sticking points between parties in employment contracts. Non-compete terms effect an employee’s ability to work after they no longer work for an establishment.  They can come in many forms, but often specify that the ex-employee cannot provide the same or similar services within a certain mile radius of the ex-employer for a certain amount of time.  These can be fought, but it is expensive. You are better off not agreeing to a non-compete at all or negotiating terms you can abide by.
  • Customer “ownership” – This goes hand in hand with non-compete agreements.  “Whose customer is it?” is an important point to discuss.  Should employment not work out, you wouldn’t want to lose a client that you established anymore than your employer wants you taking customers they established.
  • Pay rate – As an employee you should be paid by the hour whether you have a client or not, but that rate can vary widely.  As a new employee, you have no idea how booked your schedule will be until you get more established.  It is a good idea to make sure there is a minimum guaranteed each pay period. If your employer is busy enough to hire you, then they should be busy enough to meet the minimum.

 

Contracts inherently have advantages and disadvantages.  If you take the time and energy to negotiate fair, mutually beneficial terms you will generally have more advantages than not.  If you end up frustrated and feeling taken advantage of in the process of negotiation, it can be a warning to beware and potentially time to look elsewhere.