Start Up Tool Kit – Hiring

STARTUPSForming a startup is exciting business. The focus generally is on the formation of the business entity, securing of funding and the associated agreements surrounding these crucial initial processes (which is also the most glamorous part!). It is the legal, policy and governance/compliance frameworks that a start up develops and implements after the initial rush that has a significant impact on the scaling of operations and the growth of the company.

One of the first things you will be doing as a startup is hiring new employees. Here is a checklist of some core points that you as a start up need to keep in mind when developing an employment agreement:

  •  Duties and scope of employment: Define position + obligations + reporting supervisor; State a clear start date.
  • Cash/Incentives/Compensation: What is the salary?; Stock options (Develop ‘Stock Option Plan’ to add as an attachment); Bonuses: What is the signing bonus/ incentive bonus as % of base pay?; Sales Compensation (Develop ‘Sales Incentive Plan’ to add as an attachment); Relocation: Will you provide it?
  • Vacation/Employee Benefits: How many sick days?; How many paid/unpaid vacation days?
  • Termination: Is it at will?; Define for cause termination; Notice period?; Rights upon termination; Develop separate ‘Termination Benefits Plan’ to add as an attachment.
  • Prohibited activities
  • Attach a ‘Confidentiality/Non-Disclosure Agreement’ as part of employment agreement
  • Survival Clause: Which parts of the employment agreement shall survive irrespective of termination. Will these obligations be binding on future employers, executors, heirs, and administrators?
  • Governing Jurisdiction: In case of a conflict, what is the governing jurisdiction and do you want to add a mandatory arbitration clause?

These points do not constitute legal advice and are in no way a list of all the clauses that need to be a part of your employment agreement, but provide a comprehensive framework of the essentials that you should think about when undergoing discussions with your legal counsel.There are some great open resources such as Docracy that you can also tap into to learn more.


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