Here’s a common scenario: Say you’ve tendered your resignation to take on a new job offer, but your current employer has given you a counter-offer. Should you take it up?

Employers prefer to retain talent over hiring a replacement if they can, says Ms Joy Seow, senior director of consumer practice at executive search firm Kerry Consulting.

Giving a counter-offer with higher salary and better perks may still end up being more affordable and less disruptive, given the costs of training and the time needed for a new hire to settle in, she adds.

However, the same circumstances that caused the employee to seek a change, such as work-life balance, may remain.

Ms Seow says: “I often raise this question: ‘What type of company do you work for if you have to resign before they provide you with what you are worth?’

“In my opinion, it is rarely worth the trouble as your loyalty will always be in question from the day you accept the counter-offer.”

Unless salary was the sole reason to change jobs, counter-offers are rarely the answer, says a spokesman for recruitment firm Michael Page Singapore.

“In our experience, most people who accept them find themselves looking for a new job a few months later, when the situation that caused them to explore the market remains unresolved.”

Moreover, informing their would-be employer about their decision to reject the new job and stay with their current firm can prove a tricky situation.

Ms Seow says the prospective employer will likely be frustrated, even when the employee words the response carefully with the best intentions and “a well-crafted apology”.

“They also need to accept that the previous offer they received from a potential new employer may well never be available again.”

Still, being direct to the prospective employer about the counter-offer and the decision to take it is rarely the wrong approach, she says.

Employees should also avoid unnecessarily disclosing the existence of counter-offer negotiations beyond their manager and the firm’s human resources staff, or they run the risk of backlash from colleagues.

There might also be legal consequences of accepting the counter-offer, says employment lawyer Clarence Ding of Simmons and Simmons, such as when “the employee has already accepted the initial offer, such as by signing an employment contract with the new employer”.

“If so, then a binding contract has come into existence, and the employee may be in breach by reneging on their promise to commence employment.”

Mr Ding adds that you may still be legally liable even if you have merely indicated an intention to join the other firm verbally, but have not received any contract to sign yet.

“In (this case), the verbal indication may be sufficient to constitute an acceptance of the employment, albeit subject to the subsequent confirmation of the terms.”

The failure to commence employment could still constitute a breach, depending on what the understanding between you and the prospective employer was when the words were uttered.

“If an employee continues to harbour hope of a counter-offer being presented, they should take care to ensure they do not create legal obligations between themselves and the new employer, such as by signing a new employment contract or verbally agreeing the broad terms of employment,” Mr Ding says.

“There is, of course, the risk that they are seen to be dragging their feet, and the new employer may decide eventually to give the role to someone else.”

He also advises employees to carefully consider the counter-offer, which could be a worse deal.

“Very often, employers would dangle a carrot by offering, for example, a higher salary, an elevated job scope or even an outright promotion.”

But, he adds, these enhanced terms could come with onerous requirements such as more restrictions on what they can do after leaving the job, higher sales targets or even longer working hours.

Text: Tay Hong Yi/The Straits Times