Guest entry: On trust and how to settle your legal affairs


Viktor Heide

Founder & Chief Operating Officer of Contractbook

2018-09-06 | Viktor Heide

*Hello HR-Friends! I'm Viktor, founder and COO in Contractbook which is a digital platform for efficient contract management. I'm super happy that IntroDus gave me a chance to feature on their blog and thereby share my thoughts on how important straightforward legal work is to a good employer/employee relationship. I hope you'll like it! *

Mutual trust is key to every fruitful relationship; whether you are part of an on-boarding process, trying to close a deal or finding a new collaborator.

Historically, we've used handshakes or hugs to demonstrate trustworthiness (by showing that we don't hold any weapons) or trust (by acknowledging that we don't fear contamination from the counterpart). Another strategy, of course, is the Mexican stand-off where no participant is able win by showing hostility to the other. (Imagine the final scene in The Good, the Bad and the Ugly if Clint Eastwood hadn't been such a badass). In such cases you are, sort off, forced to trust.

In the modern legal system, contracts have substituted both hugs and pointed guns. They are vehicles of mutual understanding and they make sure than no one is able to abandon an agreement without dire consequences. They create a bond.

So let's agree; creating and negotiating an employment contract that both parties are satisfied with, is an important part of a successful on-boarding and in the end a trustful employment-relationship.

If this is not convincing enough for you to make sure you have sufficient employment agreements in place with your employees, Danish Law actually makes a pretty good argument. Ansættelsesbevisloven states that an employer MUST have a written agreement in place with employees that have been working for more than more than 8 hours per week in a month. If you choose the forget (or actually forget), your employee is entitled to a heavy compensation at around 10.000 DKK.

When writing a good contract, you must write in a clear and plain language that all parties understand. Remember, a contract communicates your agreement. Use short and active sentences and insure that the subject is explicitly mentioned. Each paragraph should only contain one agreement. Exceptions should follow immediately after a rule or clause. Either in a separate and subordinate sentence, or as a half-sentence. Transparency is crucial, so set it up in a manageable lay-out with headlines and short paragraphs. Don't use footnotes and never, ever may you hide important terms with smaller fonts or other lay-out gimmicks. If the counterpart notices, you end up looking like a complete idiot, and even if you succeed in making someone sign such an agreement, it could turn out to be invalid.

Making a good contract can be difficult, since it is also a question of balance. You should not necessarily describe all details and yet, elements that are likely to happen (like the employee leaving the company at some point) or could be costly if realized (like copyright issues) should always be described. We have therefor written this free ebook Den gode kontrakt with good advice. We've also collaborated with some accomplished employment lawyers to make this easy and free contract template you can use to create your next employment contract.

The Basics

As an employer you are obliged to inform the employee about certain affairs. First of all, you should be identifiable; name, company address, company name must be included. Then follows the basic description of the job you want the employee to do for you. That includes their rank, job title and tasks. Furthermore, you should inform the employee when the employment starts, it's potential duration and the weekly working hours.

Some of the most basic things to have in place are the rules concerning termination of the agreement. These usually follows a fixed scheme described in “Funktionærloven” but nothing prevents you from handling out more rights if you are the generous type.

The employee must be compensated with the agreed salary (including pension, after consideration and benefits). If the employee is subject to a collective agreement through their union or if they are hired as a “funktionær”, you should be aware that there are further requirements to meet than what is described in “Ansættelsesbevisloven”.

The Details

The above mentioned is more or less what you must include in the written agreement. The below mentioned is what you should at least consider and probably also choose to state.

If you are not making non-disclosure agreements with all your employees, you should at least write a paragraph about confidentiality in the employment contract to protect exposure of business secrets. It could be basic know-how, internal price-lists, knowledge about patents or even the secret ingredient in that sauce espagnole (family recipe, inherited through 17.5 generations) which is crucial to your restaurant's survival. All of this worth keeping inside the company.

Such a paragraph could be extended with a competition- or customer clause but beware that you would have to compensate the employee if you choose to enforce it. Other important subjects are copyright issues. Normally you have rights to what is produced during working hours, but you can never be too clear in those cases as it could mean make or break for your business. Imagine if your employee figured out some special sauce recipe himself and ended up with the rights to?

With that and other potential catastrophes in mind, you should also specify all agreements on how and where a potential dispute should be settled.

Finally, there are the rules of vacation, parental leave and sick leave. Danish law and the specific union agreements often specifies these matters. But describing it in the contract is a great way to build trust. Nobody should have to ask about their rights to such matters. So, making it clear and writing it down formally from the beginning is crucial to a get start of your mutually trustful relationship.

Lastly, just to avoid any misunderstandings: Contracts do not exclude hugs and handshake. In the appropriate dosage, hugs might even produce certain health benefits such as reducing blood pressure. Who knew?

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