TRACEY’S PRACTICAL EMPLOYMENT TIP
OF THE MONTH*

FEBRUARY 2009: A TIP FOR EXECUTIVES WITH CONTRACTS FOR A TERM *

If you are offered an employment contract, or offer letter, that is for a set period of time there is an expensive problem that most executives overlook when negotiating the business points of the deal. What I generally recommend to my executive clients when negotiating a term contract is to ask that any severance payment also apply upon the expiration of the contract term.

Most would argue that this runs counter to common sense as executives should be aware their contract is expiring and, as long as they have received the contract value, take responsibility to plan for their future. However, this ignores the fact that it is almost impossible for an executive, particularly a senior or C-level executive, to find the time look for a new position while also fulfilling their considerable employment obligations. As such, an executive will still be faced with the same lengthy job search as if they were terminated prior to expiration, except that the search would be without any cushion.

Nor does a provision agreeing in good faith to try and negotiate an extension in advance of expiration rectify this problem. First, such a provision is unenforceable and the company has no obligation to actually renew or extend the agreement. Second, it does not eliminate the fact that, as noted above, looking for a new position is a full-time job.

Next Month’s Tip: ANOTHER TIP ON EXECUTIVE CONTRACTS

Monthly Tip Archive

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* Disclaimer: The contents of this page are for informational purposes only and nothing herein is intended to constitute legal advice nor should anything contained herein be taken or relied on as such. Each individual executive and employee has a unique set of facts and circumstances that the general discussion set forth above may be wholly inapplicable to. Only through consultation with a lawyer from our firm in which all of the facts and circumstances of an individual’s unique situation are explored and considered can a true legal assessment of your rights and remedies be ascertained. Any use of this information is taken solely at your own risk.