Why It’s Time To Tear Up Employment Contracts

In today’s world no company can promise you job security. No company can guarantee you career development. And if they do, they’re lying. A new, more transient loyalty towards companies has created a generation of job hoppers, constantly looking for their next life changing career move. Yet despite this shift, employment contracts remain a product of 20th century careers. We’ve all either worked for, or know of, companies where employee interests are less important than those of the employer, ultimately meaning that employees have a reason not to trust management. It’s time we started over.

As companies grow in size and complexity, there is a tendency to standardise rather than individualise the treatment of employees. Larger companies tend to treat people like numbers rather than actual human beings. As we scale, our fear of creating a culture that doesn’t treat people fairly motivated us to create a management philosophy at TalentRocket, which we hope, represents a fairer employer-employee relationship, no matter how big we get.

The Problem With Employment Contracts

Employment contracts pre-suppose that the employee is a resource to be used for employer ends and because of this, employees have little, if any, rights to co-decision making. It is usually employers who determine the rate of pay, the pace of work and what benefits are offered in exchange for the employees’ physical and mental labour.

“Employment contracts are rarely made amongst equals, nor are they explicitly negotiated and agreed in the same way as buying a house or a car. In entering into a relationship with an employer, for the majority of employees, it means that they become subordinate to their employers’ power and authority because it is employers who control and direct the productive resources of the enterprise.” (Fox, 1974)

But how employers, supervisors and managers behave on a day-to-day basis is rarely determined by a legal contract. So instead a psychological contract is created between managers and employees to determine what both sides will, or will not do and how it will be done. This contract is the one that really matters, it’s what sets expectations on everything from how people communicate to how quickly they are progressed.

From Words to Writing

At TalentRocket we’re really lucky to have had some awesome early employees whilst we were getting off the ground. My friends and colleagues Will and Erin in particular created this awesome Graduate Guide to Careers in Startups as well as some great blog content. Having recently moved from London to Vancouver, Will wanted to keep involved with us so I suggested we should draw up an ‘alliance agreement’. Not a legal one, but a written verbalisation of each of our expectations. Our thinking went like this:

We can help Will learn more about content marketing, get some experience and grow his network.

In return, Will can help us contribute to our success by creating awesome content for our audience.

We exist as a company to help people transform their careers, and in return we we’d love all the help we can get in achieving our company objectives. It’s a two-way street of course and just having this written down really helped us understand what the deal was.

Introducing The Right Of First Conversation

As part of our agreement we outlined that both parties deserve the ‘right of first conversation’ if either side felt it wasn’t going to work out.

This means that if an employee is thinking of leaving, then we request that they discuss it with us first before they start looking. On the reverse of this if we were ever thinking of changing someone’s role or restructuring, then we’d let them know first and hopefully reach an agreement as to how we can both move forward.

This type of agreement is about setting expectations. An employment contract is about dictating obligations. There is no injustice, no betrayal. If trust is broken then either party can simply move on.

Summary

Documenting these hopes, feelings and expectations before the event removes ambiguity, and with it, the perception on either side that a breach of our alliance has occurred.

We’re hoping that we can change the perception of the relationship between employers and employees. If 90% of managers were to adopt a similar approach and consciously devote the time and effort to keep their promises and commitments to employees then we think the world would be a slightly better place.

What do you think of traditional employment contracts? Do you think a separate agreement is a good idea? Do you think that in some cases they could be dangerous? I’d love to hear any thoughts at all on this topic in the comments below.