North Sydney Commercial Lawyers

So you want your employee to be a shareholder?Print This Post

So you want your employee to be a shareholder?

Employers and employees can fall out even after many years of working together without incident. A recent case Shaw v State of NSW [2012] NSWCA 102 clarifies that all employment agreements now have an implied term of mutual trust and confidence, so neither the employer nor the employee can conduct themselves in a manner calculated and likely to destroy or seriously damage the relationship of trust and confidence. The Court also held that an employee cannot recover damage for injured feelings or any loss they may sustain from the fact that their dismissal of itself makes it more difficult to obtain fresh employment.

Nevertheless, when grooming an employee for succession in your business, it is good practice to make sure the trigger events for a share buy-back are comprehensive so you are not stuck with an unworkable situation.