I would like to seek advice as to the validity and legality of an 'employment' agreement I was required to sign.... Details as follows:
I operate as a sole trader for company (Nucleate Consulting)
Nucleate has one client (Uncommon Knowledge Ltd)
The context is - I used to work for the owner of Uncommon Knowledge when he owned a previous business and the intent was for us to go into business together... once the business could support me.
Uncommon Knowledge was created in June 2013 and I provide consultancy services to the business to help get it established... I invoice for those services each month and the services I have provided are not in dispute. All invoices to date have been paid.
The business owner of Uncommon Knowledge asked me to sign an agreement offering equity in Uncommon Knowledge.
I have never been offered, nor have ever signed to date a formal shareholder agreement of any kind, nor has any form of formal employment contract (aside from the attached) changed hands.
I am not listed publicly as a company director or shareholder.
The agreement also contains punitive terms for the business owner to claim back all monies i have ever invoiced should I leave the business - the services I have provided and invoiced (those invoices have been paid) are not in dispute.
My current situation is that Uncommon Knowledge cannot currently afford to pay my invoices and the owner has indicated that he cannot pay me for the services I provide.
Financially this requires me to seek alternative clients or employment elsewhere, however the punitive terms of this agreement give me cause for concern.
Furthermore, The business owner is in the process of merging uncommon knowledge with another business... and has offered me a company directorship and shareholding in the new entity...
Nothing has been agreed or signed in relation to this new development... and given the financial uncertainty of the current business I am not confident that I wish to be involved....
The terms of the original agreement (if valid and enforceable) trap me to the new entity even though it will probably not be financially viable for me and I have no desire to become a formal company director of a business i dont really have confidence in...
I am particularly interested in the term 'good leaver' used in the agreement. Currently there is no dispute between us... but I suspect the moment i suggest an intent to leave then this is probably going to be invoked even though, to date, there has been no issue with the services I have provided and I am considered as having a pivotal role moving forward.
I attach the 'agreement' and would be very interested in your feedback
I look forward to hearing from you
As i see it - please correct me if incorrect..
The contract stipulates that i should be paid for a defined 6 month period from Jan 2014 ... it doesn't explicitly state past that point ...
I have invoiced each month - and each month before now the invoice has been paid without question.
I have never been formally given the shares promised in that agreement and have never signed a shareholder agreement
This month (November) I was informed that although my services are expected to continue - the business is unlikely to have the funds to pay me...
We are past the period defined in the agreement, but still within the 18 month good leaver clause stated...
Hope this clarifies
Thank you - I had hoped this was the case... but needed to be sure
Appreciate your help