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Start up: legal tips to attract staff

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Start up: legal tips to attract staff

In a tight job market, it can be difficult to attract talented employees for start-ups. Apart from being innovative, fast paced and dynamic, the salary and benefit package can be a deal breaker for changing jobs. As a start-up company, you probably cannot simply give potential recruits what they want: a decent salary. In this blog, I give 3 legal tips for a strategic and attractive employment benefits package that should come in place of a guaranteed high salary.

“3 Legal tips for start-up companies to attract talented employees in a tight labour market.”

1. Professional development

Start-ups can be a great environment to learn. Many people, especially the so-called generation Y (born between 1980 and 1995) and generation Z (born after 1995) truly value professional development and career opportunities. It is one thing to have opportunities for advancement within the company but another thing is investment in training to help employees get there. As a start-up, you can make it very clear what the possible career steps are and what help you can offer with improving and developing the required skill sets. That could very well be training or coaching. Having such programs in place can also improve your reputation among (prospective) employees.

In order to avoid becoming a free training center for your competitor, you can agree on a tuition assistance clause. In such clause, you can agree that the employee (or new employer) will (partly) pay for the training if an employee leave the company.

2. Variable pay: performance bonus and participation rights

You can appreciate certain targets being through a bonus. Such targets can relate to company, team, or project performance or entirely personal goals. For this to be an attractive benefit and a true motivator, the targets should be reasonable and tailor-made to the job.

A bonus can be either in cash or in participation rights. Especially, employee participation rights can be interesting for start-ups. A profit based bonus or a profit sharing arrangement holds no benefit when no profit is generated. Yet. The granting of participation rights, such as stock options, conditional stock or stock appreciation rights, may provide an employee with some good chances to profit from a future sale of the company or an IPO.

Research shows that employees will likely feel more appreciated if they get a performance-based bonus rather than a guaranteed bonus (e.g. a 13th month). A guaranteed bonus is mostly regarded as extra, regular salary.

A performance-based bonus can be used within a strategic remuneration policy that can create a value add performance culture in order to improve the performance of the employees and the start-up company itself.

3. Ideal working conditions: experience, environment and work-life balance

Enhancing experience to create and develop new ideas, pitch a new product or service and being part of the success story. This will probably not be an easy opportunity that a young professional can at an established corporate. For such opportunities one wants to start or join a start-up!

Especially, generation Y and Z, wish to have the feeling that what they do is important, special and has social impact. Start-ups have the ability to create such an environment and a community where employees can feel they are part of it and do make an impact.

An inspiring work environment can attract employees. That could be an office garden, a ping-pong table and/or an office dog. However, even just a trendy and well-furnished work environment can already make the difference.

Work-life balance is an important factor to take on any new job. Start-up employers should prevent overworking staff. The workload should be under control and having a life outside the workplace should be acknowledged and promoted. In order to facilitate and sustain a good work-life balance you can offer flexible hours or working from home options, or from the coffee place. Or one step further: working in another time zone or work temporary from a beautiful island or in the mountains. Digital nomads are a fact of work life!

Working conditions at a start up

What benefits will be valued most, varies from person to person and from generation to generation. It also depends on the industry of start-up. Under Dutch law certain employment benefits are mandatory and some are not. Collective labour Agreements can provide extra benefits. Also, the tax consequences of the benefits should be taken into account. We would be happy to help and guide you through Dutch legislation and regulations in order to discover the possibilities and opportunities to a set-up a strategic, attractive and legally sound employment benefits package.

Please feel free to contact us. We can be reached by phone at +31 20 (0)2400710 or by email at info@penrose.law.