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Why Senior Executives Should Seek Advice Before Signing a New Contract

By Principal Lawyer, Employment & Partnership

You might be very excited by the prospect of starting your new job and want to start as soon as possible. But it’s worth taking the effort to stop and thoroughly examine the small print, as there are many aspects of an employment contract that, as a senior executive, you might wish to negotiate on. 

Before signing a new contract, it’s always sensible for senior executives to take advice to understand the implications of the clauses, and avoid falling into one of the many common contract pitfalls.

Look carefully at the bonus scheme on offer. Is it guaranteed under contract, discretionary or a mixture of both? This can be complex so you might want to get expert employment law advice.

Notice Period

For higher paid jobs your notice period may be your key legal protection in the event of termination. This is because there is a cap on financial compensation for unfair dismissal in the Employment Tribunal.

This cap operates to limit the value of litigating for many senior executives. So if you find ‘your face no longer fits’ for no good reason your notice payment may potentially be more valuable than a claim for unfair dismissal. This is particularly the case for longer notice periods.

It is also worth noting that you are not protected from an unfair dismissal until you have been in post for a minimum of two years. That is a long period of time to have to wait if you can be fairly dismissed at any time. You might want to negotiate on the length of the notice period so that it better protects you. Senior roles often have longer notice periods, of six and sometimes even 12 months, for this reason.

However, not everyone is happy with a lengthy notice period. If you place more value on having the flexibility to further your career if another job should arise, then you might prefer to negotiate a long notice period down, as some employers might not want to wait that long for you to join them.

Probationary Period

Senior Executives should think hard before leaving a secure job for one that has a probationary period. If there is a probationary period in the contract, this is generally subject to a very short notice period (which the employer sometimes has the ability to extend at their choice).

You would not want to be running the risk that you’ll be left with just one week’s pay, should things not work out in the new job, so this may be an important clause to negotiate out. Especially if you have been head-hunted specifically for the new role, why should you then not have some job security for making the move?

Restrictive Covenants

Similar to a lengthy notice period, restrictive covenants in the small print of a contract can operate to hold up your career plans.

Restrictive covenants frequently stop senior executives from dealing with their ex-employer’s clients or joining a competitor. They most typically last for anything between three and 12 months after you have left your job, so they have the potential to have a massive impact on your career. Add this time to your notice period and you could be finding yourself prevented from working in a new role, for a long time.

There are different angles for negotiation on this: Firstly, if there is a garden leave clause, check that any time served on this is off-set against the overall restricted period. The approach you take will depend on your industry dynamics, what you have in mind to do next and what matters most to you.

Other executives may accept the restriction, but use the period of time as a reference point against which to negotiate up their notice period.

You will have most bargaining power at the time you are negotiating your overall package.

Samantha Mangwana is a Principal Employment Lawyer for Slater and Gordon. She is an expert in employment law who specialises in employment contracts and bonus disputes.

Slater and Gordon Lawyers can provide senior executives with advice before starting a new job. Our employment solicitors can help to review employment contracts and negotiate new terms. For an initial consultation call us on 0800 916 9060 or contact us online.

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