Caution – Watch out for entire agreement clauses

If there is an entire agreement clause in a contract it means that that contract overrides all previous discussions, promises, contracts, offers etc.

As a senior executive you need to watch out for these clauses in a settlement agreement or in a new employment contract/service agreement you are asked to sign when you are offered/start a new role.

In settlement agreements

Often employees will be promised things during negotiations by management or have expectations based on what they know others leaving at their level may have received in the past. Anything that you want to receive as part of an exit must be expressly written into the settlement agreement as otherwise your then former employer will be able to rely on the entire agreement clause to refuse your demands.

In employment contracts/service agreements

Often candidates are promised the world at interview and rely on those promises in deciding to take the new role. Most senior executives would reasonably imagine that if they were misled into taking the role that legally they would have a cause of action against their new employer.  Whilst the law of misrepresentation can sometimes provide a legal remedy that is not the case where there is an entire agreement clause included in the contract because that clause overrides anything relied on by the employee.  In the same way employees need to ensure that any important aspects of the offer contained in the offer letter make it into the employment contract.

Other clauses to watch out for in new employment contracts

I regularly undertake fixed price reviews of contracts for senior executives being offered new roles and I am noticing the following trends;-

• Employers trying to include a power to make payment in lieu of notice by instalments and also including a duty on the departing employee to find a new role during notice and a new job is found that the employer can stop paying any further notice pay instalments.
• Trying to claim ownership of contacts added to social media by the employee during the period of their employment and requiring them to be deleted when employment ends

I have helped a number of senior executive clients in requesting changes to such provisions. Click here for a more detailed guide on clauses to watch out for when you are offered a new employment contract.

If you need advice on a settlement agreement (or need help trying to get an offer of exit terms) or if you would like a fixed fee review of an employment contract/service agreement you have been offered by a new employer please contact me.