In order to facilitate the efficient running of your company, you will need to have in place agreements to address the company’s relationship not only with its employees and shareholders, but also with all third parties. The following is a list of the more common forms of agreements you would expect to see:
Share Option Agreements
In order to incentivise staff, it is possible to offer Share Option Agreements. These essentially entitle a particular member of staff to purchase shares at a fixed price at some point in the future, thereby motivating them to increase the value of those shares above that fixed price by continuing to work for the company and promote its success. We can help you to write such schemes so that they are as tax-efficient as possible for your employees (for instance by means of an Enterprise Management Incentive Scheme).
Employment Contracts (inc Directors’ Service Agreements)
Employment Contracts (including Directors’ Service Agreements) are documents which record the rights and obligations of the parties to an employment relationship. Many contractual employment terms are implied (e.g. that employees must not steal from their employers) or are incorporated by statute (e.g. that employees are entitled to a minimum of 6.5 weeks’ paid holiday – pro-rated for part time workers). Other terms can be incorporated by a company’s custom and practice (e.g. paying a bonus at regular intervals). Whilst the latter may not seem an important consideration for a startup, it should be borne in mind because, if you are employing anyone, you may find that you develop a custom and practice from day one.
As a bare minimum, companies are required to provide their employees with a written statement of employment particulars, which is not an employment contract but includes the main conditions of the employment relationship. This must be provided within the first two months of employment. There are also obligations on a company to register its employees with HMRC.
Dependent on the nature of your startup, it is likely that we would advise you to prepare proper employment contracts for your employee(s) (and certainly for your directors, which would be called Service Agreements). For certain staff these would not need to be lengthy documents but, as well as including the information required in a written statement of terms, they ought also to include certain policies and procedures, which may seem unnecessary to you at this stage, but will prove invaluable in the event that your company experiences rapid growth which causes you to employ a number of employees in a relatively short space of time.
Our Business Department team has a wealth of experience advising in relation to employees at any stage of your company’s development.
Third Party Agreements
Even before you begin trading it is likely that you will enter into Third Party Agreements, for example to help develop your product, design your website, write the code for your app, and so forth. You may also need to develop some standard Terms of Business, Consultancy Agreements, Licensing Agreements or other contracts for use when selling your products or services to your clients.