Your Startup Employment Guide
Founders, whether they are in the ‘ideas phase’ or well and truly immersed in their venture, frequently seek our advice on issues they should consider for the smooth operation of their startup. Our biggest piece of advice has always been to protect yourself and your venture if you want to avoid problems down the line. When it comes to employing a team, this becomes even more relevant as failing to protect yourself or conduct your due diligence can lead to messy conflict and disputes. To avoid this, your startup should consider key employment aspects such as intellectual property ownership, hiring a team, employee share schemes, and drafting the right contracts to protect your venture.
Employing a Tea
When launching your startup, you will need to think about hiring a team. Hiring the right cultural fit for your startup is one of the most crucial aspects to consider when first starting out. Startups who are motivated to hire and retain the right cultural fit see increased performance, better productivity, improved quality of work, and higher employee morale. To find out more about how you can find and retain top talent you can select the link.
A great way for your startup to attract or retain top talent is through an Employee Share Scheme (ESS). An ESS aligns the interests of an employee as well as the financial interest and performance of a startup. A startup employee share scheme allows eligible employees to purchase or acquire shares or employee share options. There is also the potential for tax efficiencies, but this will involve complex licensing laws which will require a commercial lawyer or an employee contract lawyer. You can find out more about how your startup can create an employee share scheme via the link.
Employment Contracts
When engaging in a new business relationship, you should have the relevant employment contracts drawn up to set your expectations and mitigate your risk down the line. An employment contract is an agreement between an employer and employee that details the terms and conditions of employment. All employees are covered by the National Employment Standards (NES), regardless of whether they’ve signed a contract. At Allied Legal, we have outlined a few essential employment contracts for you below:
Standard Form Contract
A standard form contract is one that has been prepared by one party and where the other party has little or no opportunity to negotiate the terms. The contract is essentially offered on a ‘take it or leave it’ basis. Online terms and conditions, banking terms, insurance agreements, license agreements and mobile phone plans are just some examples of what may be regarded as standard form contracts. There is little ‘wiggle room’ when it comes to standard form contracts, unless a court or tribunal finds that the term is ‘unfair’. To find out what constitutes an unfair contract you can follow the link.
Employee Service Agreements
Employee service agreements are contracts between a founder and an employee that detail elements such as the role of the team member, the rate of services and confidentiality. The agreement provides written evidence of the terms and conditions agreed upon by both parties. As a founder, you will need to ensure that you are aware of all the basic components of contract formation as parties with poorly prepared service agreements can find themselves in dispute down the track. Careful planning in the early stages can alleviate such risk. An important way to reduce the risk of litigation is by ensuring at that the basic terms of the contract are clear and signed off on by both parties. To find out more about these essential terms and provisions you can follow the link.
Post-Employment Restraints
When a senior or executive staff member resigns, they take confidential information with them which could result in extensive damage to your startup. Post-employment restraints or a restraint clause in an employment contract, which come into effect after an employment ends, can protect founders wanting to protect the confidential aspects of their startup. This includes trade secrets, confidential information as well as client connections. The restraint clause in an employment contract will only be enforceable if they are considered as reasonably necessary to protect the legitimate interests of the startup and founder. To find out what constitutes ‘reasonableness’ you can follow the link.
At Allied Legal, our commercial lawyers can instruct you on how you can best protect your startup through the right agreements. We provide complimentary 30-minute initial consultations to help you to understand your employment needs. If you want to find out more, you can connect with us on 03 8691 3111 or send us an email at hello@alliedlegal.com.au.
