‘Risk sharing’ in contract

[snew]

Hello,

I am in contract with a startup and we are soon to launch a product. All of the contractors have been offered a performance bonus based on the successful launch. It’s a sizeable bonus and would probably impact me and my family greatly.

in the contract that is specific to the bonus there is a clause that involves ‘Risk sharing’ this seems to mean that if the company was sued as a result of the launch and had to pay out, the contractors would need to contribute proportionally to and payout, limited to the bonus they receive.

Bonus would go to my limited company, but my concern is that someone could sue the company in a years time and I may have spent the money and not be able to payout (Although very unlikely).

I am going to get legal advice on this but wanted to see if anyone had seen anything similar and get opinions.

thanks!

[northernladuk]

You want to worry more about getting paid than getting sued down the line. What's the current figure for startups failing? 90% or something daft. You've got to set expecations that you aren't going to get the bonus. We've had a couple of posts about people being paid in shares or bonuses before and from what I remember not one of them got paid.

So there is the issue of actually getting the money in the first place. There is then the issue of being sued. I could be wrong here but something tells me there are all sorts of issues with startups such as the owners jostling for position and someone leaving which would result in them wanting their fair share of the business. I'm sure this would come straight out of this pot and could be a lot of money if legal costs are also part of this pot let alone the payout.

Sounds like an awful deal to me and judging by the previous posts of working for startups resulting in being out of pocket I'd be hard pressed to want to touch it. I guess we need some feedback from people that have worked this that did pay out and have been as good as they said.

On a side note, I assume the startup is small so you've put yourself outside but small start ups are not IR35 friendly. It's often an all hands to the pump as it's too fluid for set roles and you are highly likely to be working outside of the SoW resulting in D&C issues. It's highly unlikely they'll accept a sub as well. Be very very careful making sure you are really outside IR35. That said risk sharing is a good flag for financial risk that a permie might not take so that could easily trump the rest. Make sure you get the contract properly checked as well as the legal issues around the bonus and risk.

[snew]

northernladuk thanks for the response mate. Sorry I should have been clear here. I have contract in place with them and have been working for them for close to a year with no payment issues. The Bonus was discussed at the start but we are now getting close to launch so we are formalising the legal side of it. No concerns from my side on getting day rate.

[northernladuk]

northernladuk thanks for the response mate. Sorry I should have been clear here. I have contract in place with them and have been working for them for close to a year with no payment issues. The Bonus was discussed at the start but we are now getting close to launch so we are formalising the legal side of it. No concerns from my side on getting day rate.

Oh right sorry. I guess there is aload of detail in there about timelines and how long you carry this risk etc?

Probably a stupid question but what's to stop you banking the bonus and then just closing the company?
I'm guessing a ton of things like phoenixing rules, uable to start new one if you have to MVL and all sorts but worth a think?