You are delighted with the new programmer you are taking on.
You send him his employment contract which indicates his pay, his working hours from Monday to Friday, and other benefits.
Within a month you get a huge sponsorship deal that requires you to work overtime including the weekend.
Your programmer points out that his letter only requires him to work on from Monday to Friday, 9:00 am to 5:00pm. So, you can’t mandate him to work on Saturdays.
What happens next?
The African ecosystem is taking the world by its horns. We have amazing founders achieving the incredible feat on a daily basis.
But running a startup means a lot of work, a lot of dedication and grit. Most times, people who seek jobs in startups are aware of how much work they have to put in. However, for future sake, you need to be very clear about the job expectations in the employee contract.
An employment contract is a signed agreement between an employee and an employer. It establishes the rights and responsibilities of both parties.
Although contracts differ by the organization’s operating structure and dynamics of each employment, there are some important things you should include in your contract to avoid headaches in the future.
Outline in very clear times, what the scope of employment and responsibilities are. What is the employee expected to do, what is the title of the employee’s job? Could the job functions be increased?
Where is the place of employment? Is it remote? How many days in a week are they expected to work from a specific location?
This section should also include their direct supervisor or team and an explanation of how performance will be evaluated.
Being in paid employment means that employees get to enjoy certain benefits that are not available to freelancers.
- Filing tax returns can be a pain in the neck. But as employees, they are assured that the organization will deduct the tax from their income and then remit to the government on their behalf.
- Health and medical: what percentage of the salary are you pulling aside for your employee’s health and medical expenses? It usually covers spouses and other dependents.
- The pension is also another crucial benefit. The law stipulates that you deduct a percentage from their base salary and pay to an agreed pension fund manager.
- How much vacation is the employee entitled to in a year?
This is a very important aspect of the contract.
What do I get preferably on a monthly or annual basis for being your employee? There are multiple layers of negotiating compensation. They include:
- How often does the basic salary increase? Is it quarterly or yearly? Or is it based on milestones achieved by the employee?
- Do you have a marketing bonus: Do employees who bring in new clients get a percentage of the income?
- Is there a quarterly or annual bonus? Is it guaranteed? Or is it at the discretion of the business owner/founder?
- Can the base salary be reduced if the company is in financial distress? (this is usually not included in the initial employment contract. In the event that salaries have to be reduced, companies send another contract .)
If you are looking to give your employees equity (shares) in your business and you’d prefer to do that in the employment contract, remember to outline the key issues below:
- What percentage of shares are you giving out?
- What is the consideration for the shares?
- What are the condition precedents to be fulfilled before the employee fully owns the shares?
- What happens when the employee leaves the company?
A confidentiality agreement protects sensitive information like business trade secrets and client data.
Instead of making it a separate legal document, you can decide to include it as a section of the employment contract.
The contract should include any restrictions or mandates for an employee after leaving the organization.
For example, an employee may not be allowed to start his or her own business in the same industry within the same locality in a specified time period, or he/she may not be allowed to work with the business’s clients independently. It’s important that they are clearly spelled out.
Termination Terms and Conditions
You need to clearly state what is required of either party to terminate the relationship, including the specific notice period.
You may want to also consider a severance or an outplacement plan. Should you or the employee decide to part ways, you’ll want to do so nicely, to maintain a positive employer brand.
Running a business requires you to be thorough in your dealings. As such, it would be a huge mistake to simply download a contract online and adapt to your standard employee contract without properly reviewing it..
We have designed a detailed and fully customizable employee contract for you and your business. You can get one here