Your 55th Birthday Surprise – a Senior Consultant Agreement! What to Look for Before You Sign

On your 55th birthday, you receive a lovely congratulatory message from “Talent and Care Resources” (also known as HR when you first began your career). They inform you that henceforth due to the firm’s “corporate insurance policy” (or similar explanation) that you will no longer be Partner or Principal at your professional practice. Rather, you need to be labelled a Senior Consultant and your new consultancy agreement is attached for your kind attention. Before you eagerly sign on the dotted line, review in particular the following:

1. Insurance policy

Ask to review said insurance policy that has required this change. Perhaps you approved it many years ago and it should now be renegotiated/updated. In addition, check that the provisions of the new insurance offer that the existing provider has likely given you are satisfactory.

2. Job description and duties

These may not align with what is your current reality, particularly if it has been cut and pasted from your previous agreement. Overly broad and/or ambiguous descriptions may lead to disagreements later. If you are in doubt about your job description and duties as stated in your offer letter, it is better to bring this up now and get expectations aligned or re-aligned. Sometimes it is simply a question of HR not having been updated. Or you may not agree to or may not like an expanded territory under your purview. Make sure you are happy with your stated job description and expected duties.

3. Compensation and benefits

Verify your remuneration package including salary, commission, bonus, entitlements, and the payment schedule. Make sure you understand how your bonus and incentive entitlements are earned. Check that statutory benefits such as paid leave, MPF contributions and compensation insurance are still covered. Make note of the non-compulsory perks/benefits that your firm has provided you with in the past and that these have been retained in their entirety.

4. Staff manual or employee handbook (“staff manual”)

Your consultant agreement will likely refer to a staff manual or similar document. Again, you may have approved it or even had a hand in revising it in the past. Make sure you have access to and have read the current document before you sign on the dotted line, as the terms of the staff manual are typically incorporated into your consultant agreement. You may find some internal rules or regulations that you feel need to be discussed before you sign on. For example, there may be an internal regulation that the company may reassign or transfer you to another location at their discretion, as circumstances demand. This may be a non-negotiable for you and you may need to request confirmation in the consultant agreement that you will be not reassigned and/or transferred without your prior written consent.

5. Non-compete and confidentiality clauses

Review your non-compete clause carefully for time and geographical restrictions, in particular. Recent case law has shown that Hong Kong courts will not enforce overly broad and imprecise non-compete clauses, which must be reasonable in the interests of both parties and where the restriction must be no wider than is reasonably necessary to protect legitimate business interests. In fact, there is a global trend to limit the validity of these clauses, with the US Federal Trade Commission taking the lead by proposing to ban them altogether.

6. Governing law and dispute resolution

Make sure the governing law of the contract is that of the Hong Kong Special Administrative Region which assures you of all your statutory rights in Hong Kong. Note the process to resolve legal disputes. This should be checked in conjunction with the staff manual for the internal process to handle disputes related to ongoing employment.

7. Termination and Severance

Note the termination terms and severance provisions. Make sure you understand the notice period required of you by the firm and that it is not unreasonably long. Check for your entitlements in the event of any type of termination.

The fact that your firm has committed to an insurance policy that limits the insured to those under a certain age does not mean that your rights and remuneration package should change. Do not be afraid to seek clarification about the terms in your consultant agreement. It can potentially save you and the firm hours of unnecessary discussions and possibly even litigation if you iron out ambiguities for your own and the firm’s benefit. Once you have established clarity and parity (and this may involve constructive negotiation and compromise), you will be well positioned to happily excel in your newish role and continue to make meaningful contributions to your firm.

Disclaimer: This article is for reference only. Nothing herein shall be construed as legal advice, whether generally or for any specific person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.