Much like people and pets, job offers come in all shapes and sizes. Sometimes you’re presented with a salary and benefits package and pretty much told to take it or leave it. Other times, however, your prospective new employer may be open to negotiation on everything from compensation to vacation time to perks like a car or even sabbatical time off. The amount of wiggle room you’ll have will depend on how deeply you care about getting the job and how deeply the employer is in landing you as an employee. Some years ago I had a friend whose father got laid off as the chief distiller at a Kentucky distillery when it was merged into a larger company. The new managers wanted to bring in their own team, but when they found out the newbies didn’t know how to run the place, they desperately needed for my friend’s father to come out of what was by then a happy retirement. Guess how that negotiation went.
On the other hand, if you’re fresh out of college and competing with countless other new graduates for a position with a big company or consulting firm, you likely can’t make too many demands. To the extent there is room to negotiate, there are four broad areas for consideration:
- Contract term and termination
- Promotion or ownership
Let’s briefly take each in turn.
Compensation can come in many forms, from salary to stock options to various kinds of bonuses. Generally a prospective employee can effectively ask for a higher salary and maybe a signing or retention bonus, but the other kinds of compensation usually require some kind of company-wide plan. So during negotiation the focus here should most often be on the salary amount and perhaps some kind of special bonus. On other bonuses, consider whether they are automatic for all employees or for some class of employees, or if they depend on company performance and/or the employee’s performance. For example, there might be no bonus unless company-wide goals are exceeded, and the employee’s particular goals are exceeded as well.
Benefits include things like (1) vacation time, (2) insurance (health, disability, and life), (3) paid (or maybe unpaid) time off for the birth of a child or a family health emergency, (4) reimbursement and/or time off for things like continuing professional education, membership in professional societies, or community involvement, and (5) retirement benefits. Some jobs also come with a company car, or a car allowance toward the purchase and maintenance of the employee’s car, and other perks may be available in as well. Retirement merits a bit of additional discussion. Retirement plans come in many forms, from 401k plans to defined benefit pension plans, and you should understand how long it will take for benefits to vest and how your ultimate receipt of benefits might depend on the continued health of the company.
Contract Term and Termination
Contract term and termination are often the last thing on a new employee’s mind, because except for sports coaches and people explicitly hired on a temporary basis, most employees go into a new job expecting it to last a good long time. If a contract has an explicit term and it’s not for a temporary position, there usually will be provisions governing how it will be renewed. You should look at that language carefully if you’re looking for a long term job. You should also consider what the severance provisions are, and what the real commitment is to the contract term. A contract that states it’s for two years, but also makes clear the employment is on an “at will” basis, can essentially be ended at any time. The only thing guaranteed would be a pre-termination notice period and maybe a severance payment. The grounds for termination should also be considered carefully. What would count as a “for cause” termination (like loss of a required license), and what opportunity would you have to “cure” the problem – like perhaps coming into compliance with some administrative requirement. Non-compete, confidentiality, and arbitration provisions may also be included.
Promotion or Ownership
Though not always explicitly addressed in a contract, the prospects for promotion or perhaps an ownership interest should also be taken into consideration. You should find out what the hierarchy is in the company, and how and when a new employee ascends to higher positions. If you are joining a professional partnership or limited liability company, is the expectation that you eventually will become a partner or owner? How long before you’d be considered? What would such a decision be based on? Sometimes a contract will make explicit that partnership or ownership is a mutually held goal, but virtually no contract will promise such an outcome.
Given the many factors at play in an employment contract, it’s always a good idea to seek legal advice on the terms and conditions you’ve been offered. An experienced employment contract lawyer also can help you draft alternative language during the course of negotiations. The employment attorney Minneapolis – Schaefer Halleen would be happy to assist you. Contact us about negotiating job offers >