3 ms·

Can they just pay 1 Euro or is there a set formula?

by sgc 6y ago

joyj2nd 6y ago
In nearly all countries any contract must be at "arms length". Otherwise you could do fancy things, for example regarding taxes. :-) This is actually a reason why you can not, for example, enforce something that is given freely. E.g. I give you a contract where I promise you to give you my house for free. If I change later my mind, in many jurisdictions you could not force me to write over my house since there is not "arms length". It is something for nothing. https://en.wikipedia.org/wiki/Arm%27s_length_principle https://en.wikipedia.org/wiki/Arm%27s_length_principle
- willcipriano 6y ago
  Similarly, as I understand it In the US most noncompete contracts are actually unenforceable due to the concept of consideration[0]. Every noncompete I've signed offered me nothing of value in exchange for my agreement, they weren't part of the negotiation process and were simply presented with the health insurance and other forms on my first day with a implied "sign this or you don't have a job". However that wouldn't stop someone from calling your new employer and threatening to sue. [0]https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration
  - wikibob 6y ago
    This is incorrect. Non-competes are enforceable, and are enforced, in the majority of US states.
    - willcipriano 6y ago
      We may be talking about different things. Executives often negotiate a contract that contains a noncompete. That noncompete has clear consideration as it was negotiated as part of a total deal of employment, theoretically the employee is more highly compensated for this term of the contract. However rank and file employees are often not presented with the noncompete contract until their first day of work after salary negotiations have already taken place and the position accepted. Such an agreement probably isn't enforceable[0] as far as I can read[1] as it's hard to argue its part of the employment contract as the contract is signed after you are already employed and have reported for your first day of work[2]. If it was a employment contract it would've came attached to the offer letter. [0]"Performance of existing duties is not good consideration" - https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration [1]"The very basic requirements are that the non-compete must (1) be in writing; (2) be part of an employment contract; (3) be based on valuable consideration; (4) be reasonable in scope of time and of territory; (5) not be against public policy." - https://lincolnderr.com/is-my-non-compete-enforceable/ https://lincolnderr.com/is-my-non-compete-enforceable/ [2]”One of the most common reasons that courts refuse to enforce Non-Competes is that employers make the mistake of obtaining the agreement from an already-hired employee without providing the employee with anything of value in return. Generally, such agreements are unenforceable because the employee did not receive any additional “consideration.”" - https://macelree.com/the-top-10-mistakes-with-non-competition-agreements/ https://macelree.com/the-top-10-mistakes-with-non-competitio...
    - joyj2nd 6y ago
      IANAL. But, for example, in some jurisdictions you can write in the contract that all over time is already compensated with your salary. As long as the salary is significantly above market pay there won't be any issues. If you pay market rate and the employee is regularly pulling 60h work weeks, you are setting yourself up for big liability issues.
Seb-C 6y ago
No, they have to pay your full salary for the whole time. So to enforce a 18 month non-compete agreement they have to compensate you with 18 months of salary.
- paulgb 6y ago
  It's worth noting that this is usually a significant pay cut from the usual total comp, since annual bonuses in some areas of finance tend to be >50% of total comp.
  - ghaff 6y ago
    Gardening leave payments are better than nothing if only because they force a company to put some skin in the game if they actually care about enforcing the contract. But, in many cases (I believe the newish Massachusetts law for example) it's not 100% and, as you say, even if it is 100%, it's often exclusive of bonuses, even when bonuses are pretty much a normal expected part of comp and RSUs. Plus it's maybe an 18 month pause on someone's career. Sure, for some people, 18 months off at half pay or so might seem like a pretty sweet deal. It certainly isn't for everyone.

Can they just pay 1 Euro or is there a set formula?

by sgc 6y ago

Can they just pay 1 Euro or is there a set formula?

In nearly all countries any contract must be at "arms length". Otherwise you could do fancy things, for example regarding taxes. :-) This is actually a reason why you can not, for example, enforce something that is given freely. E.g. I give you a contract where I promise you to give you my house for free. If I change later my mind, in many jurisdictions you could not force me to write over my house since there is not "arms length". It is something for nothing. https://en.wikipedia.org/wiki/Arm%27s_length_principle https://en.wikipedia.org/wiki/Arm%27s_length_principle

willcipriano 6y ago
Similarly, as I understand it In the US most noncompete contracts are actually unenforceable due to the concept of consideration[0]. Every noncompete I've signed offered me nothing of value in exchange for my agreement, they weren't part of the negotiation process and were simply presented with the health insurance and other forms on my first day with a implied "sign this or you don't have a job". However that wouldn't stop someone from calling your new employer and threatening to sue. [0]https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration
- wikibob 6y ago
  This is incorrect. Non-competes are enforceable, and are enforced, in the majority of US states.
  - willcipriano 6y ago
    We may be talking about different things. Executives often negotiate a contract that contains a noncompete. That noncompete has clear consideration as it was negotiated as part of a total deal of employment, theoretically the employee is more highly compensated for this term of the contract. However rank and file employees are often not presented with the noncompete contract until their first day of work after salary negotiations have already taken place and the position accepted. Such an agreement probably isn't enforceable[0] as far as I can read[1] as it's hard to argue its part of the employment contract as the contract is signed after you are already employed and have reported for your first day of work[2]. If it was a employment contract it would've came attached to the offer letter. [0]"Performance of existing duties is not good consideration" - https://en.m.wikipedia.org/wiki/Consideration https://en.m.wikipedia.org/wiki/Consideration [1]"The very basic requirements are that the non-compete must (1) be in writing; (2) be part of an employment contract; (3) be based on valuable consideration; (4) be reasonable in scope of time and of territory; (5) not be against public policy." - https://lincolnderr.com/is-my-non-compete-enforceable/ https://lincolnderr.com/is-my-non-compete-enforceable/ [2]”One of the most common reasons that courts refuse to enforce Non-Competes is that employers make the mistake of obtaining the agreement from an already-hired employee without providing the employee with anything of value in return. Generally, such agreements are unenforceable because the employee did not receive any additional “consideration.”" - https://macelree.com/the-top-10-mistakes-with-non-competition-agreements/ https://macelree.com/the-top-10-mistakes-with-non-competitio...
  - joyj2nd 6y ago
    IANAL. But, for example, in some jurisdictions you can write in the contract that all over time is already compensated with your salary. As long as the salary is significantly above market pay there won't be any issues. If you pay market rate and the employee is regularly pulling 60h work weeks, you are setting yourself up for big liability issues.

Seb-C 6y ago

No, they have to pay your full salary for the whole time. So to enforce a 18 month non-compete agreement they have to compensate you with 18 months of salary.

paulgb 6y ago
It's worth noting that this is usually a significant pay cut from the usual total comp, since annual bonuses in some areas of finance tend to be >50% of total comp.
- ghaff 6y ago
  Gardening leave payments are better than nothing if only because they force a company to put some skin in the game if they actually care about enforcing the contract. But, in many cases (I believe the newish Massachusetts law for example) it's not 100% and, as you say, even if it is 100%, it's often exclusive of bonuses, even when bonuses are pretty much a normal expected part of comp and RSUs. Plus it's maybe an 18 month pause on someone's career. Sure, for some people, 18 months off at half pay or so might seem like a pretty sweet deal. It certainly isn't for everyone.