One of the important aspects of business that employment law reflects is the enforceability of employment terms that you include in employment contracts.
Too often as business owners, it is easier to disregard formality in favour of the easier avenue of assuming employment contracts offer your business the requisite protection.
Correct Employing Entity
The correct employing entity is one aspect you must consider. If you operate as a trust then make sure you name the trustee and the trust as your employing entity. If you are acquiring a business from another legal entity, and the name of the employer will change, you will need to obtain the agreement of all the employees in writing.
In the event it is a large number of employees and obtaining written agreement from each one is difficult, then you should write to the entire employee base to advise that their employment with their current employer will cease on a particular date and that reporting to work the next day will deemed to be an acceptance by the employee to remain employed by the new entity and under the new conditions.
Employee vs Contractor
The other mistake that employers often make is that they choose to characterise a relationship with someone as an “independent contractor” arrangement when it is not. In the event the court is forced to analyse such an arrangement, it is quite possible that the relationship you thought you had is not the one that the court finds. Be careful if you are asked to convert an employee to an independent contractor that this is not just a “sham” arrangement. The law is quite complex in this area and you should seek advice before acquiescing to a request that may leave you liable if the arrangement is subsequently shown to be a sham.
Long -term Employees
It is often the case that over time, the duties and responsibilities of a long-term employee change. In trying to promote long-term employees to higher paid and more responsible positions, your initial contract with that employee may not remain enforceable. Be sure to take any necessary steps and care to ensure that it is.
If you want to rely on your existing contract and the terms within it, do not forget to specify a term in the new employment position description that: “all other obligations and requirements under the contract”.. dated the date it was originally signed… “are expressly incorporated into and remain binding upon the employee”… in their new position.
As a general rule, it is crucial and the law requires an employer to specifically set performance targets and also to fairly manage performance expectations.
Getting frustrated about an issue of someone’s performance is dangerous where you can’t rely on proper documented obligations to properly performance manage that employee.
If you are unsure, always take advice and never act upon feelings of frustration.
Remember the requirement to continue to grow both personally and in your business is best summed up by the following observation:
“YOU WILL ONLY BECOME WHAT YOU ARE BECOMING RIGHT NOW!”
Though you cannot go back and make a brand new start, anyone can start from now and make a brand new end.
– John C Maxwell
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