The new year could be a time for a new job. The question is, what are you really worth? It is essential to have a fair idea, if you are negotiating the terms of a job offer. Changing jobs is usually a stressful experience. If you are going to do it, it is important to leave as little to chance as possible.
Most people at director level will be familiar with benefits such as private medical and life assurance cover, pension schemes, company cars, etc, but share option schemes have recently become an increasingly familiar and substantial part of executives' packages, particularly in the e-commerce area. Both employers and employees will want to ensure that the package offers the right degree of incentive. There are Approved Share Option Schemes which must comply with Inland Revenue rules and cap the value of the shares which will receive favourable tax treatment. Unapproved Schemes which do not provide the same tax breaks for either employer or employee offer more flexibility over the terms of grant, and the conditions that can be attached to their exercise.
With pensions, final salary schemes are usually more beneficial than the money purchase schemes increasingly adopted by employers. If you are moving ft.om a secure job you should explore the possibility of negotiating a signing-on bonus or a higher rate of pay, in acknowledgement of the sacrifice you are making. If the job offer requires you to relocate, you may want to negotiate financial assistance to cover removal expenses, estate agents' and solicitors' fees.
Negotiating the notice period could be crucial. This plays a key role ill the calculation of compensation for breach of contract if you are dismissed without notice or justification. In the absence of an agreed notice period, statute will impose a minimum of one week in the first two years of employment and thereafter one week for every year up to a maximum of twelve weeks.
Employees can argue as an alternative that they are entitled to reasonable notice. What is reasonable will depend on the norm in the particular industry. A bond dealer in the City may be able to argue typically for four weeks' notice, whereas the director of a fully listed company could argue for one to two years. The starting point for calculating employees' compensation, on instant dismissal without justification, is a sum equal to the net salary and the value of the fringe benefits they would have received during the notice period. The chief executives who receive large payoffs on dismissal receive them by virtue of the long notice period contained in their contracts of employment.
It may seem obvious, but it's important to get the offer of employment in writing. Legally speaking, terms agreed on a handshake are just as enforceable as those contained in a written contract. The problem with a verbal agreement is proving its terms if a dispute does subsequently arise. Employers are obliged by law to provide their employees with a statement of their main terms and conditions of employment, within two months of their start date. However many employers flout this obligation because there is no financial sanction for failing to comply.
Avoid so called 'agreements to agree'. This type of situation typically arises where the employer promises the employee, in the contract of employment, some benefit such as a bonus or commission arrangement, but couches it in vague non legally binding terms. You should ensure that all key terms of your employment are nailed down at the outset, as this is when your negotiating position is likely to be strongest. The risk of failing to do so is that if you should fall out at a future date with your employer because the benefits have not materialised, he or she will be able to argue that as the terms were never finalised. you have no right to be compensated in respect of them.
First published in Industry in February 2001.