Negotiating terms and conditions of employment in the recovering economy

Now that the economy is looking more buoyant, we may start to see a shift in the respective bargaining positions of employers and prospective new employees regarding their terms and conditions of employment. During the recession, many employers will have had the upper hand given the scramble for work and employees’ concerns about job security. However, now things are beginning to look up, employers may have to work a little bit harder to ensure that they attract and retain the best job candidates.

Aside from negotiation on salary, there are many ways in which employers can make a job offer more attractive to a prospective new employee. For instance, they could consider giving additional paid holiday entitlement or better sick pay or pension payments. Alternatively, they could offer to improve a ‘package’ by including benefits such as private medical healthcare for the employee (and their family), a company car or car allowance, or the potential to earn bonus or commission payments. A way of sweetening an offer without incurring too much extra cost is to allow flexibility – e.g. by introducing a time off in lieu system. Offering this type of arrangement can be a powerful incentive, particularly to those with children or other dependants.

How far an employer is prepared to depart from their standard terms and conditions of employment is likely to depend on how much they want to engage and retain that particular individual. Regardless of how much that is, employers should be wary of a candidate making unreasonable demands, and think carefully before making concessions. For example, is it really in the interests of the business to agree to remove non-solicitation covenants or confidentiality clauses from a contract for a senior employee who could cause genuine damage to your business after they leave without them?

When departing from standard terms and conditions in respect of a particular individual, employers should also bear employment law in mind, and make sure that they are not unwittingly discriminating against other employees. For example, they must comply with the law in respect of equal pay and part time workers by avoiding discrimination.

Employers should also consider the effect that any disparity in terms and conditions could have on other employees, who may become disgruntled if others appear to be treated more favourably, particularly in relation to obvious differences, e.g. flexibility / TOIL.

In an attempt to maintain harmony amongst the workforce, some employers may ask prospective new employees to keep their negotiated terms and conditions confidential, or even include an express pay secrecy clause in their contract of employment. Whilst there is currently no outright ban on pay secrecy clauses, employers should note that they are unenforceable where a pay disclosure is made with the intention of identifying unlawful pay disparity. Further, it is unlawful to victimise an employee for making a disclosure in these circumstances or attempting to do so.