The Founder Employment Agreement is a crucial document used when formalizing the employment relationship between a company and its founder(s) in South Africa. It becomes necessary either at company formation or when transitioning from an informal to a formal structure. This agreement addresses unique aspects of the founder-company relationship, including executive responsibilities, equity participation, and intellectual property rights, while ensuring compliance with South African employment law, including the Basic Conditions of Employment Act, Labour Relations Act, and Companies Act. The document typically includes comprehensive terms covering remuneration, duties, shareholding, confidentiality, and restraint of trade provisions, reflecting the founder's special position as both an employee and key stakeholder in the business.
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1. Parties: Identification of the company and the founder-employee
2. Background: Context of the agreement, including the founder's role in establishing the company and the purpose of formalizing the employment relationship
3. Definitions: Key terms used throughout the agreement, including company-specific terminology and legal definitions
4. Appointment and Position: Details of the founder's role, responsibilities, and reporting structure
5. Duration and Terms: Period of employment, whether fixed-term or permanent, and any probationary period if applicable
6. Duties and Responsibilities: Detailed description of the founder's duties, including both operational and strategic responsibilities
7. Remuneration and Benefits: Salary, bonuses, equity arrangements, and other benefits
8. Working Hours and Leave: Expected working hours, leave entitlements, and related conditions as per BCEA requirements
9. Intellectual Property: Assignment of IP rights, innovations, and developments during employment
10. Confidentiality: Protection of company information and trade secrets
11. Restraint of Trade: Non-compete and non-solicitation provisions
12. Termination: Conditions and procedures for ending the employment relationship
13. Dispute Resolution: Process for handling disputes and applicable jurisdiction
14. General Provisions: Standard legal clauses including entire agreement, variation, and notices
1. Board Position: Terms of appointment to the board of directors, if the founder will serve as a director
2. Performance Metrics: Specific KPIs and performance evaluation criteria, if required
3. Share Options: Details of share option schemes or equity participation, if applicable
4. International Travel: Terms regarding international travel and overseas work, if required
5. Subsidiary Responsibilities: Duties related to subsidiary companies, if the company has multiple entities
6. External Activities: Terms regarding involvement in external business activities or boards
7. Succession Planning: Provisions for grooming successors and knowledge transfer
8. Crisis Management: Special responsibilities during company crises or emergencies
1. Schedule 1: Remuneration Structure: Detailed breakdown of salary, bonuses, and benefits
2. Schedule 2: Share Option Terms: Details of any share option or equity participation scheme
3. Schedule 3: Job Description: Detailed description of roles, responsibilities, and KPIs
4. Schedule 4: Company Policies: Key company policies applicable to the founder
5. Schedule 5: Restraint of Trade Terms: Detailed non-compete and non-solicitation provisions
6. Appendix A: Benefits Summary: Summary of all benefits and perks
7. Appendix B: Board Charter: If applicable, responsibilities and requirements as a board member
8. Appendix C: Statutory Declarations: Required statutory forms and declarations under South African law
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