Top ten tips for employees looking at a new contract of employment

Louise Lawrence, an employment lawyer at Winckworth Sherwood LLP, shares her ten top tips for employees to look out for in their new contract of employment when they are changing jobs:

• Probationary period

These can have benefits for both parties as if you end up not liking your new role you can move on quickly. However it can also be disenchanting to see that your employment can be terminated on very short notice e.g. one week during the probationary period after it has taken a number of rounds of interviews for you to secure your new role and you are giving up the security of your current role. Consider asking for the probationary period to be removed or extending the notice period to give you some financial comfort if things do not work out and the business dismisses you during the probationary period.

• Salary

Don’t be afraid to ask for more than was originally suggested. With the cost of living going up, also check when your salary will be first reviewed and what the business’s process is in relation to salary reviews.

• Bonus

You may be offered a sign-on bonus as well as performance bonuses.

Sign-on bonuses often contain repayment provisions if you leave the business within a certain period so check what these are and whether there is a sliding scale of repayment relating to how long you stay with the business as this would be more reasonable than you having to repay the whole amount no matter how long you have stayed with the business. Also check whether there is a distinction between what is generally known as being a “good leaver” i.e. leaving by reason of redundancy or ill-health as opposed to being a “bad leaver” i.e. leaving by reason of misconduct or poor performance or you resigning.

For performance bonuses find out what criteria you have to meet and obtain as much clarity in writing as possible before you enter into the contract e.g. What level of bonuses have been paid out to the team in the last three years? Will the bonus be paid partly in cash and partly in stock? What rules apply to stock? You may also want to negotiate a guaranteed bonus for the first year while you get up and running at the new business. Businesses usually set out that a bonus will not be paid if your employment is terminated or you are under notice before bonuses are paid but see if there can be a distinction between different leaving scenarios i.e. if you are a “good leaver”, you can still receive a bonus or a pro-rated bonus.

• Benefits

Employers are focussing on what benefits they can offer to employees in the war for talent. Find out what benefits you will be eligible for and in particular whether private medical insurance, critical illness insurance and death-in-service benefits are provided. The vast majority of employees have the right to be automatically enrolled into a pension scheme by their employer. The minimum pension contributions for eligible employees are 5% by the employee and 3% by the employer so check these contributions will be covered.

• Flexibility

Have you got flexibility regarding where you can work, what times you can work and how you work? Are there different rules depending on seniority? If the business offers remote-working, find out if this is just a temporary arrangement or whether this is permanent, if this is an important point for you.

• Holiday

You are entitled to a minimum of 28 days’ holiday inclusive of Bank and Public holidays per annum. This will be pro-rated if you work part-time. Many businesses offer more than the statutory entitlement however and increase the level of entitlement with length of service. See if the business is prepared to be more generous if it is only offering the statutory minimum.

• Sick Pay

Employers are only legally required to pay statutory sick pay (rather than your normal salary) if you are off work sick, which is £99.35 per week for up to 28 weeks. A number of employers have contractual sick pay arrangements where they agree to pay more than this. Have a think about whether you feel those periods are reasonable and also ideally whether they dovetail with any critical illness cover in case you become ill with a serious condition.

• Policies and procedures

It is likely that the employment contract will refer to the business’s staff handbook or certain policies and procedures – ask for these. It will give you a feel for the business’s culture but also be informative regarding its family friendly arrangements (e.g. does it offer enhanced maternity and paternity pay) and other leave entitlements e.g. paid compassionate leave.

• Notice period

Statutory minimum notice periods are short. These require that after one month’s employment, an employee and employer must give each other one week’s notice. The notice period that an employer has to give then increases by each year of service i.e. two weeks once two years’ service has been completed; three weeks once three years’ service has been completed etc. up to a maximum of 12 weeks’ notice after 12 years’ service. In certain sectors it is typical for the employer and the employee to agree longer periods of notice.

Contracts often include a right for the business to pay a lump sum in lieu of notice. This may cover salary only and also allow the business to pay it in instalments with those instalments being reduced by any money that you receive from other work. If you feel that the notice provisions are one-sided, ask for them to be made fairer.

• Post-termination restrictive covenants

These are often overlooked, when an employee is signing up to a new contract. It is really important they are reviewed carefully as they have can have a significant impact on what you can do next if your new job does not work out. There could be a non-compete covenant preventing you working from a competitor for a certain period or covenants preventing you from soliciting and dealing with clients for a certain period. There is no requirement in the UK for an employee to have to be paid during the period of the covenants. If you consider the covenants are too onerous e.g. they are for long periods, they cover client connections you are bringing to the business or there is no set off from the periods for any time spent on garden leave, negotiate these covenants before you enter into the contract.

Louise Lawrence is ranked as a Next Generation Partner for Employment Law by Legal 500. She regularly advises employees in the financial services, professional services, property, marketing, advertising and PR sectors (as well as other sectors) on their new employment and partnership arrangements.