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Contract Negotiations Essay


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Contract Negotiations


The law of contracts, which was based on common law from the medieval times, is intended to protect people in commercial agreements. The law is primarily concerned with mutually beneficial deals made by willing parties. It does not consider intent but the verbal and written statements made by the parties. The major consideration in contracts is the concept of offer and acceptance. Further, although contracts deal with a wide range of issues, these negotiations are principally concerned with two fundamental matters, including risks and revenues (Cooke, Xie, & Duan, 2016). Indeed, the majority of these negotiations are concerned with monetary concerns, such as employee benefits, wages, administrative concerns, and institutional issues. This paper will address these primary concerns of most contract negotiations with regard to employees and their relationship with organizations that employ them.


Contract negotiations, especially those concerning employment relations, are concerned with some essential issues that affect employers and employees. Often, employers face and have to deal with grievances from their employees due to various issues, such as wage levels. However, such concerns can be adequately eradicated by structuring programs and policies that ensure equity and sufficiency from an employees’ perspective. Accordingly, employers should ensure that their proposed wage structures adhere to the prevailing economic and organizational conditions.

Theoretical Foundation

A number of companies have established ways of addressing complaints and grievances amongst their employees, which may be in the form of corporate programs or policies that are specifically tailored to resolve workers’ problems in the workplace. In an age of changing working environments, workers’ rights have become increasingly important as evidenced by the growing attention directed toward employees’ grievances. Legal discourse defines grievances as any wrong, injury, or injustice that may result in resistance and which is formally expressed in terms of complaints. Human resource practitioners define workers’ grievances as formal notices or specific complaints of employees’ discontent with the employers’ job requirements, compensation, work environment, violations of collective bargaining agreements, or other facets of their engagement (Wilmers, 2017).

An ideal way of avoiding such issues is structuring appropriate employment contracts that address all the potential sources of conflict between employers and employees. One of the most common issues in employment relationships is wage-related grievances. Different firms adopt varying wage structures depending on workers’ qualifications and job requirements. Ideally, a wage structure should incorporate external market forces and the relative worth of every job to an organization. Through a job evaluation and analysis process, firms can acquire actionable information that can be used to determine the value of each job (Wilmers, 2017). The market and organizational values of a job are combined in a wage structure that adequately outlines the job grades and assigns compensation rates to the levels in line with the prevailing market rates. Indeed, decisions concerning pay rates and wage structures should be treated as different concerns in all organizations.

According to Knapp, Crystal, and Prince (2016), an evaluation of geographic, occupational, industry, and community wage differentials is concerned with wage structure concerns. Although the wage relationships in the various jobs in an organization are largely influenced by specific decisions makers, the level of wages is typically more influenced by external forces than by the wage structures. Therefore, organizations can avoid wage-related grievances by adopting wage levels that reflect the prevailing rates in the market and which are commensurate to the level of skills and effort required for a certain job.


Contract negotiations, in employment scenarios, are known as collective bargaining, which control employment relationships. Nevertheless, there is distinct difference between collective bargaining and negotiation. The former is concerned with numerous employers who share certain interests while the latter does not necessarily entail common interests among the parties. In addition, the fact that negotiations in labor relations affect public interests implies that governments may occasionally intervene due to the interests of parties external to the negotiations. Essentially, all negotiations that address wage-related issues focus of employees’ welfare and benefits. In this case, benefits may be in the form of job security, working hours, overtime grievances, health plans, working environment, retirement dues, bonuses, and so forth (Cooke, Xie, & Duan, 2016). The continuing relations among the concerned parties compel the parties to be committed to the process and to resolve all pertinent issues. In both instances, employees’ interests are represented by a trade union made up of the workers themselves.

The issues under negotiation are those that directly affect employees and on which organizations have a sway. According to Deresky (2017), employment contracts should be clearly and cautiously drafted to incorporate the expectations and obligations of both the employer and employee in such a manner as to play down any potential for future disputes. One of the key issues that should be considered is compensations. In this case, attention should be paid to the base salary, annual increments, bonuses, and promotions. Moreover, such agreements should consider any equity grants and its related concerns, such as percentages, tax implications, price, acceleration, and the vesting period. Employment contracts also include statements of the scope of engagement, including the title, responsibilities, demotions and promotions, and the place of employment. The terms of employment under the contract should include the duration of engagement, reimbursement of expenses, and the grounds for termination and compensation. Finally, such negotiations usually consider employees’ liability protection, confidentiality restrictions, issues related to inventions and the development of business ideas, death and disability, dispute resolution, post-employment restrictions, and other miscellaneous provisions.

It is important for employers to consider various factors, both internal and external, to avoid wage-related grievances. Firstly, wage structures are heavily influenced by economic conditions. As such, organizations should come up with compensation schemes that consider issues such as training needs and specifications to determine the value of a job. The relationship between training and ability requirements can be used to establish an approximate value, depending on the supply of qualified individuals. Secondly, firms need to consider the tastes and preferences of employees, including employees’ perceived non-monetary merits and demerits, such expectations of future income. Unionism should also be an important consideration when making compensation decisions. Accordingly, the forces of demand and supply should help companies to set adequate and equitable wages (Knapp, Crystal, & Prince, 2016).

Moreover, societal determinants such as class should be used to determine what jobs to be assigned to which employee in an effort to maintain the status quo. This implies that firms have a responsibility of ensuring equity, the conservation of customary relationships, and maintain the link between status and wages. Wilmers (2017) argues that wage structures should conform to the relative statuses attached to different jobs. Subsequently, every wage that is considered fair by employees is that which can easily maintain the recipients’ position in their respective social classes. Otherwise, employees will resist any pay that potentially pulls them down from their social classes, which can eventually progress into grievances and legal tussles.

Thirdly, organizational factors are essential factors that affect the level of wages offered to employees. The fact that organizations typically design job specifications and decide the appropriate personnel for every post indicates that workers’ contribution to a company can be used a determinant of salaries or wages. In addition, organizational factors such as management competence, technological advancement, collective bargaining, and competitiveness are all issues that can be used to determine the level of wages (Deresky, 2017). These organizational concerns can explain why similar jobs in different organizations may have different wage levels since no two companies are entirely similar. As such, companies can avoid wage-related grievances by ensuring that jobs offered as well as their monetary compensation fit into the firm’s internal environment.


Contract negotiations usually deal with a wide range of issues that have dire impacts on employees. The primary reason for engaging in these agreements is to eliminate all chances of legal suits due to employees’ dissatisfaction. Some of the ways of achieving this objective is by setting wages that reflect both the internal and external environments. Further, workers’ tastes and preferences, as well as their willingness to work can be used to help firms to find an amicable level of wages that compensates individuals depending on their relative worth in the firm. In addition, employees expect wages that will help them to maintain their social statuses and to help them grown financially. Any wage structure that disregards any of these issues is doomed to fail and result in complaints in employees.




Cooke, F. L., Xie, Y., & Duan, H. (2016). Workers’ grievances and resolution mechanisms in Chinese manufacturing firms: key characteristics and the influence of contextual factors. The International Journal of Human Resource Management27(18), 2119-2141.

Deresky, H. (2017). International management: Managing across borders and cultures. Pearson Education India.

Knapp, C. L., Crystal, N. M., & Prince, H. G. (2016). Problems in Contract Law: cases and materials. Wolters Kluwer Law & Business.

Wilmers, N. (2017). Labor Unions as Activist Organizations: A Union Power Approach to Estimating Union Wage Effects. Social Forces95(4), 1451-1478.

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