2019, July

Imagine this scenario: You have been offered a position that is a dream job, right in your chosen field with excellent compensation and benefits, maybe some stock options. You and your future employer have agreed to sign an Employment Agreement as a precondition. Don't panic! Keep calm and read on.

An employment contract is the business equivalent of a prenuptial agreement and just about as uncomfortable to ask for. How will you know what items should be included in the contract, or if some important element is missing? All of this can be very anxiety-making.

Of course the wisest course of action would be to review it with a lawyer. But if you decide to go it alone, here are some basic guidelines as to what you should look for in the agreement.

NEEDS: Provisions That Absolutely Should Be Part of Your Employment Contract

1. Parties. The parties (both employer and employee) must be clearly and correctly identified by name.
2. Nature of the Relationship. Is the relationship between the parties described as being an employment relationship, i.e. that of an employer and employee? If not, you could be designated as an independent contractor and that would make you responsible for paying your own payroll taxes, worker's compensation and other required remittances.
3. Job Description. The agreement should clearly define the position and the duties and responsibilities that you will be expected to take on.
4. Scope of Position. The agreement must set out whether the position is full time or part time, permanent or temporary.
5. Start Date. The start date for the position should be stated and if the employment period is for a fixed period of time, the end date should also be stated.
6. Compensation. The starting salary and all other compensation must be clearly stated: base salary, any commissions, bonuses and other remuneration - how much (fixed amounts or percentages) for each type of compensation, and the pay periods for each.
7. Benefits. What type of benefits will you be eligible for? When do they kick in and what is the accrual? Are the benefits taxable?
8. Time Off. The agreement must be clear on vacation time and holidays. It should address how and when you will be compensated for holidays that you worked and for vacation time that you accrued but did not take.
9. Termination of Employment. What are the provisions for termination? During and after probation, minimum / maximum notice by the employer with and without cause; minimum / maximum notice by employee; what would constitute just cause for dismissal.
10. Offer and Acceptance. Lastly, the agreement must state that the employer offers you employment on those terms, and must include a statement that by signing the agreement, you accept employment on those terms.

WANTS: Additional Provisions That May be Negotiating Points

The list below contains just some of the types of additional provisions that may be included in the Employment Agreement. Some of these may actually be required by law in your area. Check the current labor laws to find out which of these provisions are statutory and would therefore apply to you.

1. Performance standards that the employee must meet.
2. Qualifications required for advancement, bonuses or other extra compensation.
3. The reporting relationship - to whom do you report, and how often or under what circumstances?
4. Limits on the employee's authority (e.g. purchasing, order approvals, etc).
5. Performance reviews - how often are they conducted, what is the procedure?
6. Travel and vehicle allowances, reimbursement for other expenses.
7. Moving expenses if the employee has to relocate for the job.
8. Is there a probation period? If so, how long is it, what are the expectations, and what are the consequences for not meeting expectations?
9. Salary increases - how often, how much, what factors determine the amount?
10. Sick days, personal days, maternity leave, bereavement leave.
11. Provisions for disability or long-term illness.
12. Confidentiality, non-solicitation of customers, suppliers and other staff, non-competition provisions.
13. Ownership of inventions or innovations made by the employee during the employment period.
14. Severance pay.

Keep in mind that while items like the company's stock options plan or medical benefits package should be described in the Employment Agreement, it is unlikely that these issues would be negotiable. Your best advice is to review the Employment Agreement with a lawyer. He/She will be able to tell you if it's in our best interests to sign it as is or if there's anything extra that you should be asking for. You can also have your lawyer negotiate those extras with the employer.

Image by Gerd Altmann from Pixabay

The advantages of joint venturing

Joint ventures are much more common in today's business world as companies strive to gain access to new world markets and improve their profit margins in the face of increasing costs and the need to comply with rapidly changing laws and regulations.

Joint ventures, also referred to as "business alliances", "strategic alliances" or "corporate partnering", offer an attractive alternative to the traditional method of doing business, and there are numerous advantages to co-venturing. For instance:

• A successful joint venture can offer a company access to much broader markets, distribution networks, specialized technology and personnel, while at the same time sharing the costs and the risks with the other parties to the venture.
• Projects that are too large for one company to undertake can be taken on by several firms acting together.
• A group of smaller competitors can band together in a joint venture to keep afloat in a market that is dominated by one giant company who owns most of the market share.
• A foreign company might form a joint venture with an existing company in a market that the foreign company wants to enter, such as China. The foreign entity typically provides new technologies, processes and products to the joint venture, while the Chinese company would provide an existing business and customer base, experience operating in the local industry climate, a knowledge of local markets, and compliance with applicable governmental requirements.

What are the main aspects of a joint venture?

A joint venture is basically a short-term partnering arrangement in which the parties involved jointly undertake a project for mutual profit. Similar to a partnership, a joint venture can involve any type of business transaction or project, and the parties may be individuals, companies or other types of entities or organizations.

The co-venturers share the costs and the risks, as well as any gains and benefits, and each of them contribute money, property, effort and/or know-how to the joint venture. The participants in a joint venture each retain ownership of their individual property, which is returned to them at the conclusion of the venture.

The parties may decide to enter into a contractual arrangement to cooperate with each other (a contractual joint venture), or they may decide that it's more advantageous to incorporate a separate company to carry out the project (an incorporated joint venture). The life span of a joint venture is typically the life of the project for which it was created, although the co-venturers may determine that the joint venture should carry on for an additional period of time, as required by the nature of the business / project.

The laws governing joint ventures differ from country to country. For example, in the U.S. joint ventures are governed by state partnership and commercial transactions laws. In Canada, there are no specific laws governing joint ventures, and the joint ventures are governed by the written contract between the parties. Therefore having a written Joint Venture Agreement is of paramount importance. If the joint venture is incorporated, with the co-venturers as shareholders, the legal status of the venture is governed by the law governing corporations in the jurisdiction in which it was incorporated. It is important to note there have been court decisions where shareholders in a corporate joint venture have been deemed partners.

Managing risk in a joint venture

Like any other business opportunity, joint ventures have their own inherent risks. This is particularly true when you're expanding into a new market or into another part of the world. Before you decide to venture into a foreign market be sure that everyone on your team is well aware of the local laws and the cultural differences, customs, holidays, and social taboos. Be clear on what the purpose of the joint venture is and how your business would contribute to and benefit from the venture. What would be required of you, and what would your expectations be? What contributions would you be expected to make in terms of money, property, resources, and expertise?

Foreign joint ventures are subject to international trade laws and to local laws governing commercial transactions, labour, and consumer rights. Tax laws also differ from country to country, and you should be fully aware of what these laws are in the countries you're moving into. It's also critical to know whether there are restrictions on the amount of investment or capital distribution that foreign entities are allowed to make. Can you freely move money into and out of the business, or are there limits imposed by law? Many problems can be avoided if everyone involved is very clear on the joint venture's goals and objectives and has a good understanding of how those goals are to be accomplished. A well-researched business plan for the venture must be developed with a full analysis of the aims and objectives. Everyone involved should be well acquainted with the business plan and how it will be implemented. All of the participants must also agree on how the venture will be managed and what each party's role will be in that regard. These points should be clearly spelled out in the Joint Venture Agreement.

How to choose the right co-venturers

Choosing the right partner in a joint venture is essential to your success. You want a partner that can supply resources, property, assets, and/or know-how that complement your business. As with any other business relationship, you will want to check out all potential partners before deciding to embark on a joint venture. Do thorough due diligence, and be sure to search online as well - on the principals as well as the company (if applicable). A Google search can bring up a wealth of information, comments, feedback, personal experiences - favourable and unfavourable - that can help you form a fairly accurate overall picture of the other partners.

Putting together a Joint Venture Agreement

Once you have prepared a draft of your agreement, review it with your co-venturer(s) and legal counsel prior to signing it. At a minimum the joint venture agreement should include the following:

• The purpose, organization and structure of the joint venture.
• How the venture is to be financed.
• Each party's initial and ongoing contributions to the venture (whether capital, skills, equipment, property, know-how, expertise, etc.). Each co-venturer's contribution to the project should be of equal value.
• A procedure for parties to make future contributions.
• The participant's right to participate in the control and management of the joint venture.
• Each venturer's responsibilities with respect to handling day-to-day operations.
• Interest of the co-venturers in the products / proceeds of the venture.
• How profits and losses will be allocated.
• A procedure for a co-venture to sell or transfer its interest to another party, as well as a process for admitting new members.
• A procedure for holding meetings and a method of voting at those meetings.
• A marketing plan.
• Restrictions (if any) on venturers' activities external to the venture.
• What events are triggered by a default by a participant.
• Proprietary rights in property and assets.
• Liability and indemnity of co-venturers.
• How and under what circumstances the venture will be terminated.

Image by Gerd Altmann from Pixabay