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Home / Business / Economy / Employment

Career 14: Contract time - what to do before you sign

By Steve Hart
NZ Herald·
28 Jan, 2014 04:30 PM5 mins to read

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Apart from negotiating for more money, contract time means employees can negotiate for extra holiday time, relocation expenses, re-settlement costs, and sick leave.

Apart from negotiating for more money, contract time means employees can negotiate for extra holiday time, relocation expenses, re-settlement costs, and sick leave.

Get practical guidance before you sign.

Christchurch employment lawyer John Shingleton, a partner at Malley & Co, says an employment lawyer should be able to explain every aspect of your job contract and prime you to ask the right questions - before signing on the dotted line.

"People should seek advice once they are sent a position description or an offer of employment," he says.

"Employment lawyers can help job candidates refine their contract of employment, and coach them on what questions to ask a prospective employer," he says.

"We mainly work in the background though, if a hiring manager gets a letter from an employment lawyer then it can send out the wrong signals. And then they may go and talk to their lawyer. But having lawyers represent people at executive level is not such as issue."

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One area that Shingleton has focused on is the 90-trial period, something he is a supporter of.

"I always recommend that employees negotiate a long notice period that would only apply if the employment was terminated during the 90 day trial period," he says. "A person can find themselves without employment so it is a good idea to agree a notice period longer than the standard four weeks. An employee should expect three to six months' notice during the trial period.

Shingleton says concerns some people raise about a 'fire at will' culture under the 90-day rule is not accurate.

"There are actually quite a lot of restrictions on the trial period, so I look at them in a positive manner," he says.

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Other areas job hunters need to be aware of are any restraint of trade clauses in their contract of employment, restrictions that can be triggered at the other end of the employment relationship.

"A number of employers require a period whereby the employee cannot work for a competitor and that can be quite burdensome on an employee because - for a period of time - that person cannot ply their trade.

"But there are ways of working around that, by refining the contract to make the restraint of trade a bit more specific."

One of Shingleton's clients was faced with a clause that would have prevented them from working in the poultry industry for six month after they leave their current employer. But the restriction was eventually refined to only include working with raw chicken - leaving the employee free to work with processed chicken.

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"It sounds funny, but the subtle change can mean a great deal to the employee," says Shingleton.

Restraint of trade clauses are illegal by law. However, the Illegal Contracts Act provides that illegal contracts can be enforceable if they are fair and reasonable. Shingleton says that if an employee leaves a firm, and breaches a restraint of trade clause, then it is up to their former employer to take the matter to court.

"This is one of the rare occasions in employment law where the onus is on the employer to go to court and prove the restraint of trade is fair and reasonable," he says.

"The key point is that an employer must show they have a proprietary interest to protect their business. Just trying to prevent a person working for the competition, or a company they don't like, will not be upheld in court.

"These are the sorts of things that an employment lawyer can help with - to help identify potential issues and negotiate through them."

Fixed term contracts are another area where employees might benefit from some help. Shingleton says it is a legal requirement that employers state the reason for a fixed job offer. He also says things such as bonuses and commission payments need to be carefully looked at.

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"These payments need to be certain and clear with regard how they are calculated," he says. "You do not want a bonus structure that's a little bit vague and subjective - it needs to relate to a formula whereby everyone can sit down, look at some numbers, and see if a bonus is payable."

Shingleton says unless staff have some direct influence over obtaining a bonus then getting one "is no better than a lottery".

Apart from negotiating for more money, Shingleton says plenty of people are holding out for extra holiday time, relocation expenses, re-settlement costs, and
sick leave.

"It looks a bit funny asking for extra sick leave," he says. "But that is what some employers may do to attract people. They will promote themselves as a caring organisation and offer staff 10 days' sick leave a year.

Shingleton says other perks that may be negotiated for include a home phone line, a car, cell phone, paid training or private medical care.

However, the amount of bargaining power you have will depend on how valuable you are to any potential employer - the higher up the ladder or more skilled you are - the better your chances of getting what you want.

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"For your average job the employer sets a proposal and the employee can negotiate a little bit, but there's not huge scope," says Shingleton.

"Perhaps in Christchurch there is scope for employees to negotiate a better offer. Certainly what I am hearing is that builders in Christchurch are earning more than those outside the area. It's supply and demand."

Before signing

• Seek advice from an employment lawyer once sent a position of description
• Ensure bonus structures are clear and achievable
• Look carefully at any restraint of trade clauses
• Negotiate relocation expenses and leave
• Take into account the going rate for your skills in the current market when negotiating wages.

Steve Hart is a freelance journalist at SteveHart.co.nz

Go to www.nzherald.co.nz/career14 at noon today to ask John questions around employment contracts and law.

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