Did you know that the law requires you to do certain things when making an offer of employment?
The law recognises there’s an imbalance of bargaining power between employers and employees. Employers hold all the cards, so to speak.
So the idea is to make employers give employees a fair chance to negotiate on the terms. That’s achieved when employers do the four things below.
GIVE THEM A COPY OF THE AGREEMENT
This may seem obvious. If you’re going to offer employment to someone, you’ll provide them with an agreement, right?
Employers often don’t, though. They make verbal offers of employment or casual offers over email. “Come work for me, and we’ll sort out the details later.”
No, an employment agreement doesn’t have to be in writing to be valid. But what are its terms if you haven’t put it in writing?
Takeaway: Give a copy of the intended employment agreement when you make your offer.
TELL THEM THEY CAN GET ADVICE ON THE OFFER
You have to tell your potential new recruit they’re entitled to independent advice.
It doesn’t have to be legal advice on the terms of the agreement. They may get advice from a friend or HR person who knows about employment agreements. It’s up to them what sort of advice they seek and from whom.
The point is that it is independent advice – you aren’t forcing them to rely on what you say about the agreement.
All you are required to do is tell them that they are entitled to doing that.
Now, you could do this verbally. That would comply with the law.
But if you don’t have a written statement, how will you prove that you did it?
Better to provide a cover letter or email that goes with the agreement and mentions this right. That way you can prove you gave this advice.
Takeaway: Provide a cover letter or email with the agreement telling the employee they can get advice on its terms.
GIVE THEM AN OPPORTUNITY TO GET ADVICE
Merely telling the employee they can get advice is not enough. You could tell them they can get advice but then demand they sign the agreement immediately. That would make no sense.
To use their right to get advice, they must have a reasonable amount of time to get that advice.
How much time must you give them?
A least a couple of working days could be fair. That should be enough time to contact a lawyer or another advisor during business hours for feedback.
But where possible, I suggest you give them at least a week. Then there can be no doubt they had sufficient time to consider the terms with help from others.
In your cover letter, you should note the timeframe by which you expect the agreement to be returned. Specify a date and time (e.g. “We encourage you to get advice on this offer of employment. If you wish to accept this offer, please return a signed copy of the agreement to me no later than 5 p.m., 15 June.”).
That way, everyone is clear about how much time you are giving them to get advice.
Takeaway: Allow for at least a week between providing the agreement and requiring its return, and record the timeframe in the offer letter.
RESPOND TO CONCERNS ABOUT THE OFFER
Finally, what if the potential recruit gets advice and comes back to you with questions? Naturally, they may want to clarify some details about the agreement.
You must respond to those queries. You can’t just ignore them.
And you can’t say, “Take it or leave it!” Genuine queries must be met with a genuine response.
You may not want to change the agreement, but you should attempt to explain why you are not willing to make changes.
This is a feature of true negotiation and bargaining.
Takeaway: If the employee asks questions about the agreement, respond as best you can.
PENALTIES FOR NOT DOING THESE THINGS
As noted above, these four things are about levelling the playing field for employees.
What if you don’t care about being fair?
Well, that might change when I tell you that you could be penalised if you don’t take these steps.
That’s right. Fail to hand over a draft employment agreement for the potential new employee to consider, for example, and you could face a fine.
The penalties are up to $10,000 for individuals and up to $20,000 for companies.
So if you’re not incentivised by the thought that being fair is a good thing, maybe the fear of a fine will motivate you.
These four obligations may seem minor to you, but their cumulative effect is to give employees a fair shot at negotiating with you.
Put in place good hiring practices that will incorporate each of the four duties. For example, use a checklist to ensure you do at least these four things every time you make an offer of employment.
If you stick to good systems, you will avoid overlooking them (and incurring penalties!).