Session Four: Business + People

Question 1

Who works for your business?

Answer 1

• Directors
• Employees
• Other “workers” - e.g. the gig economy
• Agents
• Independent Contractors (consultants)

Question 2

Legal Relationship re: workers

Answer 2

• Day-to-day control of employees and agents but not of consultants or distributors and other third-party contractors
• Employers ‘vicariously’ liable for acts of employees while working
• Principals are liable for acts of agents within the scope of the agency and bound by contracts entered into
• no liability for acts of consultants/distributors
• Requirement to compensate employees and agents on termination

Question 3

Employees, the contract of employment

Answer 3

A contract, express or implied, written or oral, intended to create an employment relationship

BUT: protection of the weaker party by legislation

Certain terms are required or prohibited by statute law, and there is no freedom to contract, including for the employee, implied duties of loyalty and confidentiality

Other terms may be implied either by statute law or by common law, these can usually be contracted out of

Question 4

How to manage the employment relationship?

Answer 4

Express terms: often quite detailed in executive contracts, change of duties = breach of contract

Implies terms: lots

Duty of “Loyalty” = not to act against employer’s interests
– includes general duty of confidentiality
– not the same as fiduciary duty
– works both ways, employers shouldn’t undermine employees

Important terms implied by legislation
– maximum working hours
– minimum wage

Question 5

The “Worker”

Answer 5

• not employees
• but not wholly independent, they only have a relationship with one business at a time
• applies to individuals who do not have a formal employment contract, gig economy

“Worker” rights are set out in EU law
- maximum hour, but not minimum wage
- right to sick pay and maternity leave
- minimum paid holiday entitlement

Question 6

What to think about when hiring (employees or workers)

Answer 6

Type of relationship and contract terms
– temporary, permanent, exclusivity/non-compete

Status of Individual
– do they have the right to work, if not will need immigration clearance and a work permit

Compensation
–salary, bonus, stock options, fee or commission, benefits

Documentation and tax notification

Question 7

3 ways to integrate your business with another

Answer 7

1. Sub-contracting
2. Commercial agency
3. Freelancing

Question 8

Sub-Contractors

Answer 8

A sub-contractor is commissioned to carry out a task for your business
– allows business to expand quickly but can be expensive
– looser relationship than an agency

Often used where a bit of kit it made for you or ancillary services can be contracted out (payroll, cleaning)

What to put in the contract?
– price and price variation
– KPIs and penalties
– Who will do the work
– IPR ownership

Question 9

Commercial Agents

Answer 9

Commission-paid sales force (% of sales)
– not employees
– maybe individuals or companies

Contrast agents and distributors: agents sell for the principal, and distributors sell for themselves

Agents often used for new territories

“Goodwill” in contacts is owned by the principal, the agent loses business value if the contract is terminated

“Commercial Agents” Directive, the agent is entitled to compensation

Question 10

Franchisees

Answer 10

Franchisee is “buying” a package of a know-how, brand, and sometimes IP

Franchisees are not normally agents
- no resale of goods supplied by principal, customer “belong” to franchisee

A basic relationship is a kind of sub-contracting

Franchises sectors vary but mostly in consumer-focused business like McDonalds or the post office