Acting to stop harm: the FCA and Appointed Representatives
As 2020 drew to a close, many people had high hopes for 2021. However, the virulent and unforgiving COVID-19 pandemic has ensured it has not been an easy start to the year for most.
Some senior executives will be looking for a change, others may have fallen victim to one of the rounds of redundancy which have resulted from the pandemic.
When receiving an offer to commence a new role, there are numerous points to consider before signing the contract. I set out below my top 10 tips for negotiating a new employment contract:
You should ensure as far as possible that you definitely want to work for the new employer and that there will be no negative surprises. One way of conducting 'due diligence' is to ask questions about the terms of the contract. Even if changes are not made to the wording, responses from the new employer can be indicative of its approach and may provide you with important comfort that you can trust, and will get on with, your prospective new colleagues.
Consider whether there is any scope to negotiate the basic pay on offer and what your negotiation levers and business case might be, in order to justify your request for an increase. Ascertain when the first pay review will take place and ensure this is in the contract. Is there scope to negotiate a guaranteed pay rise after a certain time frame, or after certain objectives or targets have been met?
These are indicative of status and so can be important. Consider whether you will be reporting to a sufficiently senior person within the organisation, as well as who will be reporting to you. Are the reporting lines reflective of your seniority, and will they give you direct access to the relevant individuals? Does the job title properly reflect your seniority?
Directorships: Does the role involve being a board member of any group company? If so, are you comfortable with the level of responsibility? Is there Directors’ and Officers’ Insurance cover?
If you are being asked to sign up to terms which you consider are onerous, consider asking whether these are standard terms and whether all your peers are subject to the same terms.
Carefully review the contractual provision on ‘place of work’ to ensure it provides you with the necessary flexibility required for your particular circumstances. Also, ensure that the wording is not so wide that there is a risk you might need to travel or relocate somewhere which is inconvenient or undesirable for your personal circumstances.
Carefully review the contractual bonus provision and scheme rules. As a general rule, it is in your interests to ensure your contract includes a provision which clearly sets out bonus entitlement and makes it as guaranteed as possible. Additionally, if your bonus is conditional upon you meeting certain criteria, then these criteria need to be both achievable and clearly set out in the bonus provision in your contract. If it is not possible to change the contract, then you might consider requesting a written assurance via email, which clarifies your bonus expectation. If you receive any verbal assurances, keep a note of them, as this might be useful if there is a dispute down the line.
If this is to be part of the package, ensure you understand the value of the equity and the conditions or requirements attached. For example, what are the conditions for vesting of awards and are there ‘good/bad leaver’ provisions (which could mean that you might get nothing if you leave, or the employer terminates the contract under certain circumstances)? Also, do the scheme rules include additional restrictive covenants (note these can be more onerous and restrictive than restrictions under the employment contract)?
Determine what benefits you will be entitled to. You may wish to request a copy of the staff handbook, as well as a summary of benefits. Consider in particular sick pay, life insurance, death in service, permanent health insurance, pension and family friendly policies. Do they match those which you had in your previous role?
Ensure that your notice period is suitable both in terms of your level of seniority and industry practice. The notice period can be a 'double edged' matter – if you want to leave the company, a long notice period can create difficulties in finding a new job; however, if the employer terminates the contract, a longer notice period can provide a level of financial protection. Note that most executive contracts contain 'garden leave' provisions such that, if you resign, the employer will effectively use the notice period as a post-termination restriction to keep you out of the market.
Carefully review the contractual restrictive covenants in respect of both 1.) the role you are leaving and 2.) the role you have been offered. Ensure that by joining the new role you will not be in breach of any restrictions. Additionally, ensure that the new contract does not include onerous restrictions which would hamper your ability to commence a new role in the event that the contract is terminated by either party. Pay particular attention to the length, geographical scope and nature of the restrictive covenants. Can you request that the restrictive period is reduced or the geographical scope is limited? Are the defined terms, such as ‘client’ or ‘competitor’ appropriate and sufficiently clear?
This is a non-exhaustive list of points to consider and tips. The wording of the proposed contract, offer letter and supporting policies should be checked thoroughly in order to protect your position and ensure that you maximise the value of your offer.
We have extensive experience of negotiating and advising on the terms of employment contracts, in particular for senior executives in financial and professional services. Please get in touch if we can be of further assistance.
Moira is a highly experienced employment solicitor. She has successfully represented both employers and employees in the Employment Tribunal for unfair dismissal, discrimination, whistleblowing and breach of contract claims. She has particular experience of advising employers and senior executives in respect of redundancy situations and diversity and equality matters.
Moira’s clients include senior executives, partners and employers, working within a broad range of industries. She regularly acts for clients within the financial and professional services, tech, media, design, publishing, manufacturing and fashion industries.
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