What Belongs in a SaaS Employee Agreement

Agreements are designed to clarify the relationship between parties. Employment agreements are a particularly difficult agreement type because any disagreement on the terms typically goes in favor of the employee. However, that is only after a disagreement has arisen. The power dynamic between the employer and employee is such that frustrations among current employees are often not expressed.

Take for example an employee that read his agreement to promise him 10% of the profit in his division. But a few weeks after his hiring, the company was reorganized and the employee was put into a larger division of roughly three times the size. The employee might rightly think that this means the variable compensation just tripled.

Management might have missed that nuance or have even had a conversation with the employee about how the compensation arrangement will have to change given the new structure. Obviously, frustration ensues.

The goal: Align employees to the company's objectives and manage risk.

How can Golden Section Assist? Golden Section's venture partner can assist here.

Steps

1. Draft an Employee Agreement that clearly delineates the scope of the role and compensation details. Make sure that both expectations and compensation are thoroughly, unambiguously detailed in the agreement. The more clearly these details are outlined at the outset, the less resentment and potential conflict in the future.
2. In addition to scope of work and compensation details, Golden Section recommends including protocol for IP, reporting, and off-boarding.
3. Work with your legal counsel to finalize the employee agreement details.
4. Codification. Store your signed Employee Agreements in a cloud-based central backup location for easy reference.

Concerns

1. Avoid vague understandings with employees. If the primary metric of the compensation arrangement changes due to strategy change, take the time to address that and clarify with the employee. Failing to do so will certainly result in missed expectations and, at worst, extreme dissatisfaction and turnover.
2. Don't skip the paperwork in favor of expediency. Filling out paperwork in arrears is always trickier than you will expect. It is worth delaying the start, or living with pushed deadlines rather than hastily onboarding an employee who then refuses to sign the proper documents.
3. Don't skip legal. The law is extremely complicated. Employment law is even more important. In most jurisdictions the employee will have the automatic upper hand in a process. Therefore, make sure your documents are legal and that you leverage your legal counsel when dealing with exceptions beyond your normal arrangement.