Are you like most executives when you receive a job offer? Do you immediately start negotiating your salary?
Or do you negotiate the entire employment contract that could shape the next several years of your career?
Over the years, as a headhunter of candidates to management positions, I have seen senior executives walk away from otherwise attractive opportunities because of clauses hidden inside the employment contract.
- None of them rejected the salary.
- None of them rejected the company.
- They rejected the risk.
After more than 20 years as an executive recruiter in Thailand, I can tell you that the employment contract often receives far less attention than it deserves.
Many executives become so focused on the opportunity that they assume the paperwork simply confirms what was discussed during the interviews.
It often does not.
First conflict: Two-year industry non-compete
The first was a non-compete clause that prevented the executive from working in the hiring company’s industry for two years.
Here’s the catch. Imagine spending your entire career building expertise in one industry, only to sign a document that could prevent you from working in that industry if the employment relationship ends.
The executive immediately asked a simple question.
“If I cannot work in my industry for two years, how am I expected to earn a living?”
A fair question, right?
If a company genuinely wants to restrict your future employment, there should be a discussion about whether compensation should be paid during that restricted period as is the case in most European countries.
A non-compete clause should always be reasonable in its duration, geographical scope, and business purpose.
Use non-binding clause instead of non-compete
Rather than imposing a broad non-compete clause, employers should consider whether a more balanced non-dealing clause would adequately protect their legitimate business interests while still allowing the executive to continue working in their industry.
A non-dealing clause is generally narrower than a non-compete clause because it does not stop the former employee from working for a competitor.
Instead, it prevents them from doing business with the employer’s customers or prospects with whom they had dealings. Courts are often more willing to enforce this type of clause because it is more targeted. It reads:
For a period of one (1) year after termination of this Employment Agreement, you shall not directly or indirectly solicit or accept business from the Company’s clients or prospective clients with whom you had material business contact during your employment.
In my experience, this type of clause often strikes a better balance. It protects the employer’s customer relationships without preventing an executive from earning a living in the industry they have spent their career building.
Second issue: Benefits hidden behind “company policy”
The second clause referred to almost every important benefit as “company policy.”
At first glance, that sounds harmless, but in reality, it means the employment contract does not actually guarantee very much.
Housing allowance, provident fund, company car/transport allowance, annual bonus (contractual vs. discretionary), annual leave, flexible working arrangements, medical insurance, and other benefits had all been discussed during the interview process.
Yet the contract simply referred to “company policies” that the candidate had never seen.
The executive refused to sign until every benefit that influenced the decision to join was clearly written into the employment agreement.
That was the correct decision.
If something is important enough to persuade you to accept a role, it is important enough to appear in writing.
Many join a company because of their future boss
Who you report to matters. Who will really be your boss?
Your future boss may have changed, and the reporting line may no longer be the one discussed during your interview.
This executive had accepted the role partly because he believed he would be working directly with a respected regional leader he had met several times during the hiring process.
The employment contract, however, showed a different reporting structure and named someone he had never heard of as his direct manager.
When he asked follow-up questions, he learned that leadership changes were already underway. The role he had accepted was no longer exactly the one presented during the interviews.
Fortunately, this was identified before signing.
I regularly advise candidates to ask whether any leadership changes are expected and whether their reporting line is likely to remain unchanged.
At senior management level, your direct manager often has as much influence on your success as the company itself.
There is a lesson in all three examples
The salary was one reason why these executives were attracted to the new opportunity.
The employment contract determined whether they accepted the job.
An offer letter, employment contract, is far more than an administrative document. It defines the employment relationship that could shape the next several years of your career.
Read every clause. Ask every question.
The best time to negotiate an employment contract is before you sign it. Once you have accepted the offer and started your first day, your negotiating position becomes much weaker.
