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I'm being offered 2% ownership of a company as an additional benefit to accept employment at a company (on top of wages). In the contract it says I'll own 2% while my employment lasts.

I have no idea what this means. Would that make me liable if the company makes a loss? The way I've been sold it by the owner is: I'll get 2% of all profit. How would I know if they made a profit, and how much it is?

I know this forum isn't for legal advice, I'm more curious what the common understanding of this is; I'm imagining this is common practice?

I'm in Australia in case that matters.

closed as off-topic by HorusKol, gnat, scaaahu, mxyzplk, DarkCygnus Feb 19 '18 at 17:38

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    I don't know what it means, but it seems unusual to me. The idea that this stake int eh company only lasts as long as you're employed there is odd (I guess it's not just stocks? I don't think those would up and vanish if you left.) I would definitely consult with at least a financial adviser, and perhaps also a lawyer, to make sure I understood all the implications of this "bonus" for taxes and for employment law. – Steve-O Feb 18 '18 at 21:27
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    Profit sharing bonuses aren't too unusual in Australia - but "2% ownership" makes it sound more like an employee share scheme. I'd definitely get a lawyer on this - things to consider: what happens to your share when more employees are hired (if everyone gets 2%, the company will lose out by the 50th hire); how do you qualify for the bonus payment (minimum service [our profit share is pro-rated - some aren't)]; date of qualification). – HorusKol Feb 18 '18 at 22:35
  • I'm pretty sure that if your remuneration is at least partly profit based, you have the right to income/loss statements for the business. If it's an employee share scheme, and you truly have "ownership", you essentially have the same rights as any other shareholder. But IANAL - so you need to talk to a real lawyer. – HorusKol Feb 18 '18 at 22:36
  • while employment lasts !! run away NOW – Neuromancer Feb 18 '18 at 23:36
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    This sounds like a startup company. ie: your guess is as good as mine. Have everything in writing. "while employment lasts" is a very dubious clause. Ask about end of employment return of 2% of the company, do they buy it from you? Do you give it to them for free? Are you liable of any losses if the company doesn't get profit? – workoverflow Feb 19 '18 at 12:27
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This isn't common practice. If it's not clearly and formally laid out in writing, then ask for clarification.

Check the contract carefully when the time comes, because when employers start getting creative over remuneration it is a red flag.

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sounds like it means a profit share.

given this, you'd be well within your rights to ask to see end of year financial for previous and sales targets for this year

sounds interesting, unless the owner is a nutter this could be generally good for you

question is when these profits are calculated, and when distributed? given the wording you use,if they fire you the day before distribution, do you get anything?

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