When an employee and employer are parting ways, it’s always recommended to keep it simple and have a smooth transition. However, this is the time when an employee is faced with the legal loopholes s/he would have missed when signing the contract. Our advice, seek legal advice early. The early intervention of lawyers in the executive employment separation process can be of assistance when negotiating a departure package.
It all starts with the break up
From experience, most separations between executive employees and their employer are negotiated quickly and without much fuss as neither party wishes to spare the time and expense of litigation or any adverse publicity. At the most senior level of an organisation, it is not good if the separation is messy. The optics is neither good for the company, nor the future employment prospects of the departing employee.
Then it’s the beginning of the end
The problem stems from the start of the relationship when the employee agrees to a notice period of one to three months. From our experience, disputes typically arise when the relationship comes to an end and the employee sees the contracted notice period as inadequate.
Employees start noticing the notice period
The employee generally feels that the notice period or payment does not reflect their length of service with the company or the contributions made during the course of their employment. From the employer’s perspective, it may result in them having to resolve the dispute through further negotiation and incurring legal fees. Most employment contracts I have seen for senior executives are clearly inadequate. The contracts fail to take into account such matters as professional standing; age; qualifications and experience; or the expected period of time it will take for the employee to obtain alternative employment. Many of the contracts were renewed during the course of employment without proper consideration for these important issues.
Pause before you sign
Before signing a contract of employment, employees should give careful consideration to the reasonable notice period and any other entitlements such as bonus’ or any other fringe benefits such as cars; mobile phones laptops etc. In considering reasonable notice, an executive should consider such matters as how long it might take to find suitable alternative employment.
What’s negotiable in the relationship?
In the event a senior executive and the company have agreed to part ways, by engaging an experienced employment lawyer, the senior executive can negotiate entitlements outside of the contract employment including:
- Greater severance package including any bonus’ that might not have otherwise been paid;
- Outplacement services;
- Additional use of motor vehicles; telephones; computer services; corporate cards or additional fringe benefits;
- Taxation benefits associated with any termination package;
- Ensure non disparagement of senior executive;
- Ensuring that any restraint of trade provision which may restrict their employment is renegotiated to allow them to enter the industry or that the separation package at least covers the duration by which they may be prevented from seeking alternative employment.
Once the parties agree on a package, then it is standard practice for them to enter into terms of settlement confirming the arrangements. It is important you have a lawyer review the terms to ensure they reflect your understanding of the agreement made.
The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.