Legal Business

Employment Contract- things to note…

Welcome back! The Chronicles of Becky continue… *wink*

Recall that in our last episode Becky had to register BeckyWise Digital Limited in order to bring on a new investor and expand her operations. She was now able to get a new office location, upgrade her office equipment and employ additional staff… business was good.

As her client base grew, Becky was able to groom two of her more competent employees into associates whom she could delegate to work independently on different client accounts with minimal supervision. One of these associates was called Joseph.

18 months after registering BeckyWise Ltd., Alhaji Bako, one of Becky’s clients, requested a quotation for a digital campaign to market one of his products. Becky’s initial quotation of N4.5 million was however rejected by the Alhaji Bako who then initiated negotiations to reduce the amount. While negotiations were ongoing, Joseph secretly approached Alhaji Bako and offered to execute the campaign for him for half the amount quoted by Becky. Because Joseph had previously handled one the Alhaji’s briefs that was delegated to him and had done a good job at it, his offer was accepted. Joseph went a step further by immediately breaking away to start his own outfit… with Alhaji Bako as his first client.

Becky was furious. She had lost a major client, a key associate and a lot of money. She made up her mind that Joseph would not get away with what he did so she called a lawyer who immediately asked for a copy of Joseph’s employment contract to get a basis for legal action. Becky scratched her head. She had not gotten her employees to sign employment contracts. All she gave them were offer of employment letters. “Without an employment contract,” the lawyer said, “we have no basis for legal action in this case.” Joseph probably knew and had capitalized on this.

Becky was devastated. She had to engage the lawyer to prepare employment contracts for all her employees to sign.

Case analysis

The contract between an employer and employee is the key document upon which their relationship is based. A contract of employment should always be given to all member of staff (be it full time, part time or consultants) as they are key internal stakeholders of your company.

Important elements of an employment contract

Where an employee is in a position that exposes him or her to sensitive information, the tricks of your trade and your major clients, you would do well to get them to execute a contract that includes the following key terms:

• Restriction from competing – starting or helping to start a company that can take away your clients or compete against you
• Restriction from soliciting – trying to recruit your workers or partners away from you
• Non-disclosure – sharing confidential business information or secrets to outsiders or to a competitor
Note: A time frame should also be set for these restriction i.e. 1 year after the employee has left your office.

Other basic requirements of an employment contract are (amongst others):
• The employee’s position and job description
• Working hours
• Salary
• Tax and Pension deductions
• Annual leave entitlement
• Terms of termination of the contract

Don’t have contracts for your employees yet? Get a lawyer to sort this out for you.
You know I love your feedback kindly share your thoughts.

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