09 September 2019

People matters for start-ups and founders – getting it right the first time (part two)


You have been approached by an exciting new start up to join them on their journey, or maybe you are a founder who is now dealing with investors and other stakeholders who are taking a more hands on approach. To ensure the relationship gets off on the right foot, here are some essential pointers which will make sure all runs smoothly from the beginning.

1. Before you sign

a. Read and negotiate your contract of employment – a well advised employer/investor will be protecting its interests. Protect yours. Pay particular attention to termination provisions – for example, seemingly onerous post-termination restrictions may be enforceable and prevent you from earning a living. It is much better to negotiate these upfront and understand how these interact with any shares or share options you have.

b. Understand how your salary and benefits are taxed – relief may be available on pension contributions or if you are working overseas.

2. During employment

a. Be aware of policies – in particular, regarding emailing documents to your personal email address. It is tempting to do this when there are documents in existence that appear to support the case you wish to make. However such actions are easy for your employer to detect and are likely to amount to misconduct or breach of contract (and, in some cases, a criminal offence), which will greatly weaken your position and could lead to termination of your employment. Even if you are a founder and a director, you must take care in removing company documents.

b. Take care on social media – some employers/investors are sensitive about apparent personal use and data can never be deleted. Check company policies and know what is expected of you.

c. Know your statutory rights and obligations – Your obligations can seem like a minefield but the first step is ensuring you understand them, particularly if you are a director subject to additional statutory duties; or have regulatory responsibilities or requirements.

3. If relationships turn sour

a. If you are treated poorly at work or fall out with other shareholders/directors, document it to assist with any complaint – email notes to yourself (using your personal email address) to time stamp them. Remember that such emails might be disclosable to the tribunal or court in a dispute. Speak freely to your solicitor – such communications are privileged and not disclosable. They can help you formulate your aims and how to go about them.

b. If things aren’t going well, be prepared to discuss how to resolve them. In certain circumstances, an ‘off the record’ without prejudice approach might be the best thing for both parties.

c. If you are planning to move to a competitor or restart again on your own, take advice at an early stage – strategy is crucial. Don’t just assume that seemingly onerous post-termination restrictions are unenforceable – you could be defending protracted and expensive High Court proceedings before you know it.

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Category: Article