Should a lawyer review my employment contract?

Welcome to my latest LinkedIn newsletter! In each issue, I will be sharing Employment Law insights on important topics with my connections and followers.

Whilst I am a tad sceptical that the UK employment market has slowed due to the seemly unending threat of a 'Slowcession' it does seem that many Senior Executives are holding firm rather than jumping ship.

The reasons are varied, certainly tech, banking and consulting have been hit by a near global downturn but also their employees aren't leaving (as there are limited opportunities available in a shrinking market and also why give up a likely redundancy pay out by prematurely and voluntarily leaving?) so new opportunities internally are few and far between.

But whether you have survived a leadership or management 'reshuffle', successfully mapped yourself internally into a more secure role, skilled up to access external roles in a developing industry (AI, ESG or Climate?) or were just in the right place at the right time for an offer too good to turn down, you're not finished yet.

When taking on a new role, it can be tempting to focus on the headline terms, such as the salary and benefits package and skip over the other provisions.

The heady excitement of the offer, the feeling of relief that the multiple interviews, meet and greets etc etc have finally paid off with a decent offer can leave you feeling like the hard work is done - you’re understandably wanting to just get on with the job in hand and implement all those great plans that got you the offer in the first place.

However, you would be wise to stop and take a breath, now is not the time to let your guard down. I can’t stress enough, having dealt with many post-signing regrets over the years, that you need to review all of the terms of a new contract, and take advice before signing on the dotted line. This is not an unnecessary step. It’s the final step in a long, drawn out and probably quite exhausting process. A little more effort, time and financial investment will put in you in a much stronger, secure, and protected position.

Take advice before signing on the dotted line.

Having a lawyer review your contract before you sign helps you understand your obligations while you are employed - but often more importantly after you leave. You have the strongest leverage with a new employer (or manager if moving internally to a new role) when you receive an offer - as your new employer/manager is keen for you to take the role as they, too, have gone through a long and probably costly process.

It is much easier to renegotiate the terms of a contract at the time it is entered into rather than seeking to reopen negotiations once a binding agreement has been reached.

Most Senior Executives are expected to have taken legal advice, and often there is a clause in the employment contract or service agreement that confirms you have or at least have been given the opportunity to do so. I have dealt with many cases where the employer has even paid for or contributed toward, the fees for this service.

...having taken independent legal advice, the Executive agrees that......        

Whilst it can be tempting to sign on the dotted line, taking the time to review the terms and conditions of employment at an early stage can reap dividends, both in terms of negotiating your current terms and conditions and looking ahead to your future career plans.?

If you are on the move and have an offer that you would like independently looked at, get in touch with me, [email protected] to book an initial consultation.

What to watch out for:

Restrictive covenants

While these are to be expected, they should only go so far as to protect the employer’s legitimate business interests and should not be in restraint of trade. Are they more onerous than previous restrictions? You should also ensure that by entering into any new arrangements, you are not in breach of any restrictions imposed by your previous employer.

View on flexible working

Flexible and homeworking clauses, mobility clauses and the company’s view on flexible working requests – do these reflect your current and future personal circumstances? If these are important to you, agreeing your working hours at the time of negotiating your terms is highly advisable, as the flexible working request process is not currently favourable to employees.

Unclear or unrealistic performance targets

Unclear or unrealistic performance metrics for bonuses, commission payments or share awards. Whilst most bonuses will be discretionary, there should be some certainty around when payment can be expected and how it is assessed. Ensure you review these clauses and any supporting documentation carefully to ensure the company hasn’t included wording which could mean in practice that there are very few circumstances in which you would receive a payment, particularly were you to leave your employment.

How conduct or capability matters can impact on payments

One of the key areas of contention during employment, and in some cases once an employee has served notice, is your employer’s process for dealing with a conduct or capability issue or dispute. Wide disciplinary provisions or uncertainty around the justification for instigating disciplinary or capability processes, particularly if linked to any payments e.g., of bonus or shares or termination payments, is something best clarified and agreed where possible at the outset.

The contract is also likely to give the employer the right to suspend you, and you should check in what circumstances this can be done, and again if there is any impact on any payments to be made to you.

Less favourable benefits

Watch out for less favourable benefits, such as sick pay, annual leave, family friendly benefits such as maternity pay, and benefits such as health insurance, permanent health insurance and life assurance. In the case of benefits that are underwritten by an insurer, have you received copies of all the relevant policies and scheme rules? To what extent can the company vary or withdraw the benefits? In certain cases it may be possible to transfer a benefit from a previous employer, which can be helpful for example if you are receiving treatment under a health insurance scheme, that might be excluded from cover under the new scheme.

Short or excessively long notice provisions

Whilst a long notice period can provide you with some protection, it can work against you if you think you are likely to look to move on in the short to midterm and a long notice period, coupled with post-termination restrictions can keep you out of the market for a significant period of time.

Is there a probationary period?

Whilst many employees, particularly at a senior level, will not welcome a probationary period, they do give you the option of terminating the employment early if the role does not work out as expected. If there is a probationary period, the performance expectations during this period should be both clear and realistic.

You should also note whether the employer is required to inform you that you have successfully completed the probationary period and whether either or both parties have the right to extend the period.

Most employers retain the right to put you on garden leave for the duration of your notice. You need to consider the impact of this carefully if/when you choose to leave.

Copyright, IP and ownership of working methods

Protect your IP and business contacts – ensure that any sideline projects, businesses, or patents that belong to you, for example, are carved out of any IP clause. Failing to do so could result in your employer acquiring your IP on the basis it was work carried out ‘during employment’.

If you have a UK contract and wish to discuss get in touch [email protected]

I have attached a link to my website profile at Penningtons here: https://bit.ly/RubyDinsmore . Please reach out anytime.

You can also find more information on the advice we at Penningtons provide for senior executives here: https://bit.ly/Senior-Executive-Employment

ps Congrats on your new role!