Lawyer :"Yes, are you asking how to retain employees?"
Manager Zhang: "Yes, these employees are so dishonest now. It is obvious that the labor contract was signed for three years, but in the end it took only a few months A lot of people ran away. Can we agree on liquidated damages and make employees pay high liquidated damages if they leave before the end of their employment period?"
Mande Corporate Services Lawyers often receive this question. Today Let’s talk about this issue.
1. Can liquidated damages be set for the labor period?
No way! According to legal provisions, matters that can set liquidated damages in the labor contract do not include working hours that do not reach the time limit stipulated in the labor contract. Therefore, it is not legally feasible for bosses to retain employees by setting liquidated damages. If employees leave 30 days in advance, they can leave with a pat on the back! Labor law is such an oblique protection for workers. Employees cannot keep them even if they want to leave, and bosses are also helpless.
Second, are there any legal ways to retain employees?
Keywords: special training
The only thing in the labor law that allows employees to agree on a service period is when the company pays professional and technical training fees for employees. In this case, the company can agree with the employee on the service period and corresponding liquidated damages. In this case, the unexpired service period mentioned by Mr. Zhang can be met, and the employees will have to pay high liquidated damages!
Note: General induction training does not belong to the special training here. Generally, it is required to participate in training from external training institutions or special training instructors. The company pays for this and the funds are earmarked for special use. This is special training for the agreed service period!
3. Application of equity incentive system in the company
In addition to creating an environment suitable for the stable development of employees in terms of salary system, personal development, overall atmosphere, etc., the company has also adopted equity incentives in recent years way to retain employees. Huawei, Mengniu, and Alibaba are all examples of successful use of equity incentives!
Using equity incentives to allow employees to hold shares can create benefits for the company and employees, improve employees' work enthusiasm, enhance employees' sense of ownership, and thus promote employee retention.
(1) When will equity incentives be carried out?
Many customers come to inquire about whether equity incentives can be provided in the early stages of starting a business. In fact, equity incentives should not be implemented prematurely. On the one hand, due to the instability of initial employees and frequent entry and exit, it is not conducive to the development of the incentive system. On the other hand, because the value of their equity at the beginning of their business was not reflected, it was easy for people to feel like they were pie in the pie, and it did not have much effect on retaining employees.
The lawyer suggested that after the company obtains the first round of financing and the equity value is reflected, equity incentives can be implemented.
(2) What proportion of shares should be used for equity incentives?
The equity ratio used for incentives is generally between 10% and 15%. Be careful not to use too high a ratio for equity incentives. This will make the equity too dispersed and weaken the original shareholders' control over the company. For the 10%-15% equity used for equity incentives, lawyers recommend that it be held by major shareholders first and then used to motivate employees. Some companies do not reserve this part of incentive equity in advance, but dilute part of the equity from shareholders as equity incentives when incentives are needed, which intensifies the difficulty of equity incentives and the complexity of industrial and commercial changes.
(3) How to formulate an equity incentive plan?
When a company provides equity incentives, it needs to formulate an equity incentive plan. The plan should include selecting incentive methods, determining goals, setting performance evaluation indicators and exercise conditions for incentive goals, dividend provisions, and formulating a recovery mechanism for incentive equity when employees leave, etc. Specifically, the company needs to communicate with lawyers on internal details, analyze specific issues in detail, and formulate an incentive plan that meets the characteristics of the company.
In short, equity incentive is to give employees equity under certain conditions, so that employees feel that they are not only working, but also have shares and dividends. The development of the company is closely related to me, and there will be no dividends even if I leave! Therefore, when considering resigning, the incentive equity in their hands becomes an important weight for them to stay!
For specific equity incentive issues involving your own company, please consult a Mander corporate service lawyer!
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