How to negotiate a contract in London

London

So, you've landed your next leg up on the FIG, ECM, or M&A ladder in London. Now, be careful not to topple over reaching for the dotted line.

Anne Nicholson, an employment lawyer at Fox Williams, says employees in the City of London should watch out for employment contracts which fail to honour spoken promises of guaranteed bonuses: "During an interview you may be promised a certain level of bonus. But the contract will often make this dependent on individual performance, or the performance of the company as a whole."

Nicholson says the written contract overrides the verbal promise: "It will almost always contain a clause saying it represents the entire agreement."

If signing away a guaranteed bonus were not bad enough, some banks insert clauses depriving employees of their bonuses altogether. Paul Puxxon, a lawyer at Ferguson Solicitors, says some contracts make bonuses conditional on continued employment: "Your bonus might be paid on February 1st, but several days before you get the big check, the bank could terminate your employment and you would get nothing at all."

Before signing a contract, it is also worth scrutinising the document for penalty clauses. Some employers add clauses demanding that employees pay a financial forfeit if they leave before a specified date or if they do not start at all. For example, one broker is currently embroiled in a legal battle with a rival firm after reneging on a contract that committed him to begin working there-- he faces paying a 200,000 (€296,000) fine.

The chief executive at a City of London brokerage says unscrupulous firms sometimes include clauses in employment contracts demanding that employees reimburse the cost of training them if they leave: "They will say training has a monetary value, and you have to pay it back."

The most controversial clauses, however, are those intended to prevent wayward employees from working for rivals. Known as 'restrictive covenants' or 'non-compete clauses' as in the US, they can cause considerable problems: Anne Nicholson said bank employees who move firms will often find they are prevented from taking their clients with them, or even from working in the same sector for a specified period of time.

Many people think these kind of clauses cannot be enforced, said Nicholson. In some cases they are right, but often they are wrong. "The more senior you are, the more carefully you should look at your contract. Courts will assume that you knew what you were signing, and will hold you to it," she says.

Click on the following cities to see how to negotiate a contract in each: New York, Frankfurt or Paris.