24 Jun 2019

Do It Yourself : how to negotiate an employment contract

From Lately, 10:30 pm on 24 June 2019

The first of our weekly series "Do It Yourself" employment law expert, Max Whitehead, gives us some tips and tricks on negotiating your work contract; how to approach it and how to get the best result for both parties.

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Photo: 123rf

How to Negotiate your Employment Agreement by Max Whitehead

When was the last time you got a pay rise? Two years ago? Never? If you’ve been in your job for a while, you may think that more pay - or better conditions - is well overdue. Now is the perfect time as New Zealand is experiencing a labour shortage.

Be aware that when you are negotiating your employment agreement, you are engaging in the process of buying and selling your skills, time and expertise. So, before you approach your boss, there are several things to consider.

What do you want?

Okay, before you do anything, you must be clear about your goal. For example, you may want a pay rise, flexible hours, additional holidays, a company vehicle, a paid day off on your birthday, a significant overseas trip or the ability to work from home, etc. So, whatever you hope to achieve during negotiations, have a clear goal.
Do your research

Don’t go into negotiations ill-prepared. Do some research first, and correlate all the information you gather into one document using bullet points. Then, look at your findings from your employer’s perspective. To an employer, what matters is time and money. If you can save your company either of these, your boss will be delighted. Remember,  during negotiations, perspective is critical - not yours, but that of your employer. You must consider how you can influence this perspective.

So, here are some things to find out:

What is the benchmark?

Find out what others in your industry who hold a similar position to you get paid. TradeMe and Seek are useful for finding this out. You can ask recruitment agencies for an indication of the market rate and how easy it is to fill your position. Survey organisations also provide pay-level guidelines, but they’re not cheap. You can compare your colleagues’ responsibilities and salary to yours, too, although this information may be confidential.

Also:

    Check out the Consumer Price Index (CPI) to see how much the cost of living has risen since you last received a pay increase.
    Find out whether your company has recently raised its charges and by how much.
    Google.’
    Go online to to see if your position is listed as a skill shortage.

What have you achieved?

How have you added value to your organisation? Do you meet - or exceede - your Key Performance Indicators? Have you completed a challenging project? Review and note  your activities. Also, analyse your current responsibilities to see if there are opportunities to create cost savings for your employer or generate more profit.

How much would it cost to replace you?

Employing a recruitment agency, preparing advertisements, reviewing and interviewing applicants and conducting reference checks takes time and money. So, find out how much it would cost your employer to find someone to 'fill your shoes.’ Employers are always worried about money.
Understand your employment agreement

An individual employment agreement must include:

    the names of the employer and the employee (to make it clear who are the parties to the agreement)
    a description of the work to be performed (to make it clear what the employee is expected to do)
    an indication of the place of work
    the agreed hours or an indication of the hours that the employee will work
    the wage rate or salary payable (must be equal to or greater than the relevant minimum wage) and how it will be paid (if the employee won’t be paid in cash, this should be in the employment agreement or must be agreed in writing somewhere else)
    a plain explanation of how to help resolve employment-relationship problems, including advice that personal grievances must be raised within 90 days
    a statement that the employee will get (at least) time-and-a-half payment for working on a public holiday
    for relevant employees, an employment-protection provision to apply if the employer’s business is sold or transferred or if the employee’s work is contracted out
    any other matters agreed on, such as trial periods, probationary arrangements or availability provisions
    the nature of the employment, whether it is fixed-term, etc.

Mentally prepare

Before starting negotiations, you need to convince yourself that your company is lucky to have you. Don't overplay this attitude, though; just keep the thought in the back of your mind for self-confidence. Also, think of an industry-related story that you can relate to your manager to show that labour shortages are hurting New Zealand's economy.

If you are looking for a promotion, honestly consider the following:

    How competent are you? Can you do the job without constant guidance?
    How trustworthy are you? Can your employer trust you with a company vehicle or credit card?
    How emotionally stable are you compared to others?
    Can you work independently, or do you work better in teams?

The negotiation

Start by sending your employer a formal email invitation to engage in bargaining for a renewal of your employment agreement.

Both you and your employer have a legal obligation to:

    bargain
    act in good faith
    and be responsive and communicative.


Be professional

Adopt a professional approach to the negotiation process, and don’t get drawn into making it into a humorous session.

Make eye contact, and without going overboard, display sincerity and passion. Don’t speak too quickly or cover too many subjects at once. Instead, have a list in front of you, and tick off each item before moving to the next. Always have a narrative to support each point.

Never make pay demands just because you think they’re due; give your employer reasons backed up by the research you have done.

If you have another opportunity elsewhere, don't overplay this 'card;' your employer may think your loyalty is disappearing.

Be honest

If your employer discovers you have made an error and been untruthful, your chances of succeeding in your negotiation will diminish. And, don't threaten to quit unless you mean it. If you you stick around after not getting what you want, your integrity will be compromised, and your employer will lose respect for you.

Listen

Employers are usually fearful of making promises they can’t keep. However, during contract negotiations, they will often give hints in regards to your future, so listen for hidden messages. Write down important points; you don’t want to forget anything.

Set a deadline

Don’t leave a meeting without knowing what happens next. Propose to your employer a follow-up meeting in a week, and schedule it there and then.

Follow up

Finally, after you’ve met with your employer, send an email that lists the main points that you raised. If during your negotiations, you didn’t set up a follow-up meeting, propose one. If you receive no response, email your employer again to confirm that they received your message. If you still don’t get a response, you can seek legal advice.