How to Negotiate an Employment Contract





As Barron's experience shows, employment contracts are worthwhile documents to draw up when you're negotiating a position with a new employer. These documents can protect an employee's personal, professional and financial interests in the event the employer decides that it no longer needs the employee's services. Such a scenario might arise if a new CEO comes on board or there's a "change in control" because the company has been bought, sold or merged with another.

"If you don't make earnings improve by 10 percent in the first six months, you're out of a job. That's the kind of risk an employment agreement protects against," says Susan Egan, an employment attorney with Egan Law Firm in New York City. "You're protecting against the risk that you're going to end up out the door."

Employment contracts are standard for CEOs and are often inked for other high-level executives like presidents, chief operating officers and even chief financial officers. However, they're not the norm for IT executives, according to IT executives and headhunters. What's more, many executive recruiters and employment attorneys observe companies moving away from employment contracts because they see the contracts as a liability. They're also tricky for employees to negotiate.

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