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How to negotiate an employment contract

How to negotiate an employment contract
WATCH: Here are six tips that can help you negotiate a contract

An employment contract is far more than just an agreed upon salary and vacation clause.

“It’s the bedrock of the employment relationship as it contains all the terms and conditions upon which you’ll become employed,” says Natalie MacDonald, co-founding and managing partner of Rudner MacDonald, LLP, and author of Extraordinary Damages in Canadian Employment Law. “You need to know and understand everything in that contract because it guides you through your employment relationship.”

When it comes to negotiating an employment contract, the amount of room for compromise is dependant on your bargaining power. If you’re being lured away from your job by another company, there’s a lot more room for negotiation, versus applying to a company of your own volition.

But that doesn’t mean everything written in the offer letter is set in stone, says Stuart Rudner, an employment lawyer and co-founding partner of Rudner MacDonald.

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“If they want you, they’ll negotiate within reason,” he says.

Salary negotiation is usually the top concern when reviewing a contract. It seems like a risky move to ask for more money once you’ve been made an offer, but the experts agree that you shouldn’t shy away from asking for what you believe you deserve.

WATCH BELOW: Salary negotiation tips for women

“We found that those people who attempted to negotiate their salary in a constructive way are perceived as more favourable than those who didn’t negotiate at all, because they were demonstrating the skills the company wanted to hire them for,” Robin Pinkley, author of Get Paid What You’re Worth, said to Monster.ca.

There are a number of considerations to bear in mind before signing, however. Read below for expert tips on how to negotiate your employment contract, and how to avoid any hidden pitfalls.

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#1 See a lawyer

Not a tax lawyer or a real estate lawyer, but an employment lawyer, Rudner says. They’ll be able to point out potential pitfalls where you don’t see one.

“A termination clause is a perfect example,” he says. “Everyone who is let go is entitled to reasonable notice. But it’s a myth that you’re entitled to one month per year of employment. That’s not a law.”

Rudner explains that the Employment Standards Act, 2000 in Ontario (the legislation varies from province to province) guarantees payment for one week per year of employment, and caps the severance at eight weeks. As a result, a 20-year employee could be let go with only eight weeks worth of pay.

“A lawyer will help you identify that clause and ask for it to be amended,” he said.

#2 Educate yourself

It’s up to you as a potential employee to find out what the industry standard is for salaries and how much the organization you hope to work for pays their employees. That way you can negotiate within a reasonable range — “The company will either say yes or no, but they won’t reject you,” Rudner says.

He cautions to examine the compensation clauses carefully.

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“A lot of organizations are offering variable compensation these days, with commissions or bonuses. They try to fold these into the compensation package by saying you’ll be paid a base of a certain amount and you’ll be eligible for a 40 per cent bonus. But that’s discretionary and it’s not guaranteed.”

READ MORE: Who wins and who loses in Ontario’s decision to raise minimum wage to $15 an hour?

#3 If it’s not in writing, it never happened

In some cases, employers will tell potential new hires that they can’t accommodate certain requests right away, but that they’re willing to revisit the issue in six months. But unless you have them write it into the contract, you run the risk of being met with quizzical looks (or worse, flat-out denial) when you ask for a raise or an extra week of vacation time six months after starting.

“Unless it’s in writing, it’s not guaranteed. All you’ve received is a promise to consider it,” Rudner says.

#4 Look for a probationary clause

This one is quite simple: if there’s a probationary clause in your contract, whether it’s three months or more, try to have it removed.

“This gives you no job security at all, and means you can be terminated at any time and for any reason within that time frame,” he says.

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#5 Make sure everything is explained

Rudner recalls an odd experience where his client received a “rather detailed” offer with some glaring omissions.

“It didn’t actually specify the job title, duties or location of employment,” he says, which gives the employer room to make drastic changes without consulting the employee.

READ MORE: It’s all in the strategy: Tips for landing that dream job

When reviewing your offer, make sure your position is clearly stated, who you will be reporting to and whether you’ll have direct reports. While your employer always has some room to make adjustments, they don’t have the right to change your title or duties without restriction.

#6 Know when to negotiate and when to back down (or away)

While MacDonald points out that your negotiating power is predicated upon how much the company wants you, that doesn’t mean you should sign anything without ensuring that it meets the legislated employment standards. You can always ask for changes, whether it’s higher pay or more vacation time, but the reality is the company will provide you with what they see fit.

“You can always argue for more,” she says. “But remember, you can also always walk away from it. If you feel that a company isn’t going to consider your needs appropriately, don’t take the job. That’s not a company you want to work for.”

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