Tips for negotiating a better employment contract

If I said that less than one percent of employees negotiate their contracts, would you be surprised? You might be keen to sign your contract after getting a promotion or a new job. Yet this piece of paper does not just determine your salary -- it sets the overall terms and conditions for your employment. Slow down, read the fine print and negotiate.

Protect your rights

If you are in a senior position, it’s unlikely that an enterprise agreement or award will apply to your employment. The main source of your rights will be your contract. Don’t be afraid to negotiate terms of your contract. Build in protections from the outset and you will encounter fewer uncertainties during your employment.

When negotiating with your employer, remember to:

  • Pick your timing. Negotiate when you commence employment, get a promotion or after a big win.
  • Consider your objectives. Work out what’s important in your employment and prioritise your top three goals.
  • Be flexible. Don’t just focus on salary. Consider negotiating other benefits, such as a bonus, increased leave entitlements or flexible work arrangements.

Common clauses to consider in contract negotiations

Salary

Contracts often state that salary and performance reviews are conducted at the employer’s discretion.  

Tips: Negotiate to remove discretion from these clauses. Seek a commitment from your employer that performance and salary reviews will be conducted annually and in good faith. By including these specific commitments, you will have a more structured career path and a contractual right to challenge arbitrary decisions around performance and pay.

Bonuses

Contracts are often silent on bonuses or state that bonuses are awarded at the employer’s discretion. Bonus schemes might also be set out in policies -- but these generally are not contractually enforceable.

Tips: Negotiate to have your bonus entitlement recorded in your contract. Seek a commitment that you will receive a set amount if you meet stipulated targets. If your employer insists on maintaining discretion, negotiate to include a statement that the discretion will be exercised in good faith

Termination

Most contracts permit an employer to terminate the employment on notice and without cause. Employees who do not have access to the unfair dismissal jurisdiction will have limited protection from dismissal.

Tips: Negotiate a clause that requires your employer to have just cause for terminating the employment, or which provides you with an opportunity to respond to the reasons for termination before a decision is made.

Notice period

Notice periods can play an important role in providing employees with a period of financial security where a dismissal occurs.

Tips: Negotiate a longer notice period in your contract to ensure that you can comfortably transition into alternate employment without experiencing significant financial pressure.

Entire agreement clauses

Entire agreement clauses are common in contracts and stipulate that the agreement is based solely on what is recorded in the contract, and excludes previous negotiations or representations made. These clauses can restrict your ability to rely on verbal promises and to enforce benefits set out in workplace policies.

Tips: Your contract should record all the benefits your employer has promised you. Do not settle for verbal assurances. If important benefits are set out in policies (for example, redundancy pay), seek to have those benefits recorded in your contract. 

Restraint of trade

Do not assume that restraint of trade clauses are unenforceable. These clauses are increasingly being used by employers, and can have a significant impact on your career progression.

Tips: Negotiate a reduction in the duration or geographical scope of the restraint, seek to exclude particular clients from the restraint, or ask for additional remuneration if your employer insists on these restrictions.

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Mia Pantechis

Maurice Blackburn Sydney
Mia Pantechis is an employment and industrial Senior Associate, practising in Maurice Blackburn’s Sydney office. She is listed by the prestigious Doyles Guide as a member of one of the top law firms for employee & trade union representation in NSW in 2017. Mia graduated ...

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