people discussing employment contract

Employment Contract: 5 Tips for Negotiating a Better Contract

So it’s time to negotiate your next employment contract, and you are determined to get the best possible deal. It’s just that the last time you had to do this, you ended up getting railroaded by an executive committee that pushed you into taking a lower salary than you had asked for.

This time, you want to be better prepared so that doesn’t happen again.

You came to the right place! Below, we will examine what an employment contract is, the biggest things people wished they had fought for, what businesses are trying to achieve, and how you can use this list to arm yourself during your next negotiation.

Ready? Give us your best offer, and we’ll counter!

What is a contract of employment?

A contract of employment is a legal document that sets out the terms and conditions of your employment with your employer. It will detail things like your job title, duties, working hours, salary, and holiday entitlement. It may also cover other perks and benefits, such as company car details or private healthcare provision.

This is technically different from an offer letter, which is simply a letter from your employer confirming the main details of what you negotiated. Once you have accepted an offer and started working for a company, you will usually be given a contract for employment to sign.

Top-five things people wish they had negotiated

No one comes out of a negotiation with everything they ask for but there are a handful of things that seem to pop up again and again as regrets. If you’re looking to get the best possible contract, here are five things you should keep in mind:


A flexible schedule is important, whether that means being able to work from home one day a week or having the ability to take on new projects as they come up. This will not only make you feel more productive but also valued by your employer.

More paid time off (PTO)

We all need a break now and then, and the ability to take extended time off is becoming increasingly important to employees. If you can negotiate more PTO, you’ll be able to recharge your batteries without having to use up all your vacation days.

A clear path to career growth

Employees want to know that their hard work will be recognized and that there are opportunities for advancement within the company. By negotiating a contract that includes a clear path to career growth, you can ensure that you’ll be able to continue developing your skills and advancing your career.

Better health insurance

Health insurance is one of the most important benefits employees receive, and it’s also one of the most expensive. If you can negotiate a better health insurance plan, you’ll be able to save money on premiums and out-of-pocket costs.

A sign-on bonus

A sign-on bonus is a great way to start your employment on the right foot. Not only will you receive a financial boost, but you’ll also have some extra money to put towards relocation costs or other expenses.

Stock options, a bigger office, and a company car are all nice benefits, but the five items above are what people most commonly wish they had negotiated into their employment contracts. Now let’s take a look at what businesses are trying to achieve with their offers.

The business perspective

Contrary to what some people would have you believe, most businesses aren’t trying to squeeze you for every last dollar in a negotiation. Instead, it is more about protecting themselves against risks, such as:

  • You leaving the company before your contract is up
  • You not being able to do the job you were hired to do
  • The cost of training you and then you leaving shortly thereafter

As a result, businesses will try to minimize these risks by asking for things like:

  • A non-compete clause
  • A confidentiality agreement (a.k.a., a “non-disclosure agreement”)
  • A longer contract term
  • A smaller salary increase than you might be asking for

Knowing that these are their targets provides you with some leverage to use, which can give you the ammunition you need to put some pressure on them.

Five tips for negotiating a better employment contract

Now that we know what businesses are looking for, let’s get into the five tips you can use to negotiate a better contract:

1. Do your homework

Know what the market rate is for your position, as well as the going rates for benefits like health insurance and PTO. This will help you know how much room you have to negotiate.

For example, if you are asking for a salary that is significantly higher than the market rate, the company will be less likely to budge.

2. Be prepared to walk away

It’s always good to have a backup plan, and this is especially true when negotiating your employment contract. If the company isn’t willing to meet your demands, be prepared to walk away from the deal. This doesn’t mean you should be bluffing; instead, have another job lined up or be ready to start your own business.

3. Know what you’re willing to compromise on

Not everything is going to be a make-or-break issue, so know which items you are willing to compromise on. For example, you may be willing to take a lower salary if it means you get more PTO.

4. Use negotiating tactics

There are several different negotiating tactics you can use, such as the “anchoring” technique. This involves starting the negotiation at a high number, which gives you more room to negotiate down.

Another tactic is the “BATNA” technique, which stands for “Best Alternative To a Negotiated Agreement.” This means having a Plan B in mind, such as walking away from the deal or accepting a lower salary, that you are comfortable with if the negotiation doesn’t go your way.

5. Be confident

Finally, it’s important to remember that confidence is key when negotiating your employment contract. If you don’t believe in yourself, the company is less likely to give you what you want. So stand your ground and be confident in what you are asking for.

By following these tips, you will be better prepared to negotiate a better employment contract that meets your needs and interests.

Common mistakes to avoid

It’s not enough to just know what to do, you also need to know what not to do. Here are some mistakes that people make when negotiating their contracts:

  • Not doing your research
  • Accepting the first offer
  • Having no alternatives
  • Failing to understand what the other side wants
  • Making emotional decisions

Now let’s take a closer look at each of these so you can avoid them in your next negotiation!

Not doing your research

This is the first and most important mistake you can make. You need to know what the going rate is for your position, in your industry, and in your geographic area. This will give you a baseline salary to start from.

To find out this information, you can consult with friends in similar positions, search online job postings, or even talk to a recruiter. Once you have an idea of what others in your situation are making, you can use that number as a starting point in your negotiations.

Accepting the first offer

The second biggest mistake people make is accepting the first offer that is made. This shows that you are desperate and not willing to negotiate, which will put you at a disadvantage for the rest of the negotiation.

If the employer offers you a salary that is lower than what you wanted, counter with a higher number. Remember, it is always okay to ask for more than what you want, because you can always come down from that number.

Having no alternatives

The third mistake is not being prepared to walk away from the negotiation. This means that you are not confident in your ability to find another job, and the employer will take advantage of this by offering you a lower salary.

If you are not happy with the offer, be prepared to move on to an alternative. This will show the employer that you are serious about your career and not desperate for any job.

Failing to understand what the other side wants

The fourth mistake is failing to understand what the other side wants from the negotiation. This means that you are not thinking about what the employer needs and only focusing on your own needs.

You need to remember that the employer is looking to save money, so they will be looking for someone willing to work for less. To be successful in negotiations, you need to understand what the other side wants and be prepared to give them what they need.

Making emotional decisions

The fifth and final mistake is making emotional decisions during the negotiation. This means that you are letting your emotions guide your decisions, instead of thinking about what is best for your career.

For example, you might be so upset about a low offer that you accept it without negotiating further, or you might be so happy with an offer that you don’t bother to negotiate at all. Both of these decisions are emotional and can lead to you making a mistake in the negotiation.

Final thoughts

By following these tips and avoiding some of the common mistakes, you’ll be ready to dominate your next negotiation and land the employment contract you’ve always wanted.