In brief
You’re a gun engineer. You've got a product roadmap. You've got a sleek pitch deck. You've probably even got a ping pong table, because apparently that's still a thing.
What you might not have is a plan for the employment law landmines sitting under your new business. And we promise, they're there – quietly ticking – whether you've thought about them or not.
Employment lawyers spend a lot of time cleaning up messes that were entirely avoidable. So, in the spirit of avoiding mess, here are the five things every tech founder should get right, early.
Key takeaways
- Know your award coverage
- Get your documents sorted… especially the ones that protect your IP
- Good culture is not a substitute for good management
- Build systems for psychosocial risk
- Think about equity properly
In depth
1. Know your award coverage (yes, even for your software engineers)
Here's a fun fact that surprises almost every founder: modern awards aren't just for retail workers and baristas. Plenty of roles in tech businesses (think support staff, ops coordinators, even some "generalist" hires wearing five hats) can be covered by an award. On top of that, almost all software engineers are as well.
Getting award coverage wrong, or ignoring it entirely, isn't a paperwork problem. It's an underpayment problem, and underpayment problems compound (literally, with interest) and sometimes with penalties that will make your Series A look small.
Here's the bit that should really get you: investors care about this. A lot. When you're raising capital, expect employment compliance to show up in due diligence. And when you eventually sell, your buyer's W&I insurer will absolutely be asking about award coverage, because underpayment liabilities are one of the most common and most expensive skeletons they find in the closet.
2. Get your documents sorted… especially the ones that protect your IP
Your IP – your code, algorithms, and so on – is probably your whole business. So, it's slightly alarming how many founders have employees and contractors working without good quality written contracts (with an emphasis on quality).
Good contracts do a few critical jobs:
- Make sure IP created by employees and contractors actually belongs to the company (“obviously it's ours” is not a legal argument).
- Lock down confidentiality, so your trade secrets don't walk out the door with a disgruntled ex-employee.
- Set clear expectations on conduct, restraints, and what happens when things end.
- Correctly classify the role and pay structure so that any award obligations are satisfied. A contract that’s silent (or wrong) on this is how our first topic above turns into an expensive problem.
When a buyer's lawyers start digging through your data room, “well-drafted employment documents with proper IP assignment” is one of the most reassuring things they can find. “We're not totally sure who owns the code” is one of the most terrifying.
3. Good culture is not a substitute for good management
Good culture is genuinely great. It's just not a defence to an employment claim.
Tech founders often think their culture is “too tight-knit” or “too collaborative” for HR issues to ever really bite. While we admire the optimism, our years of experience tell us otherwise. Founder disputes, bullying allegations, performance issues that spiral into something else… These things happen in fantastic workplaces too, because workplaces are made up of humans.
The businesses that come through these moments well aren't the ones that never have a dispute. They're the ones that had someone in their corner who could say, calmly, “here's exactly what we do next”.
Get a trusted adviser in your corner before you need one. Not after the group chat has already gone feral.
And a word of warning on cultures of positivity. Ensure they don’t become toxic. A workplace in which managers are not prepared to have difficult conversations is one headed for trouble.
4. Build systems for psychosocial risk (this one's not optional anymore)
Psychosocial risk (the stuff that causes psychological injury at work, like excessive workload, poor role clarity, bullying, etc.) is now squarely a work health and safety issue in Australia, not just a nice to have HR thing.
That means you need actual systems: ways to identify risks, processes to respond to them, and a culture where people can raise concerns without fear of being labelled a misfit. Startups are particularly exposed here because the pace and fluidity that makes them exciting can also be psychosocial risk factors if not well-managed.
You don't need a 40-page policy manual on day one. But you do need to actually think about this before regulators, or a very unhappy former employee, leave you with no choice.
5. Think about equity properly
Equity is the tech industry's love language. It's how you attract talent you can't yet afford to pay market salary, and how you get people to genuinely care whether the company succeeds.
But equity done badly creates more disputes than almost anything else on this list. Vesting schedules that are vague, good leaver/bad leaver clauses nobody explained properly, or promises made verbally in the excitement of a hiring pitch that don't match what's actually in the documents. Nothing sours a working relationship faster than an argument about what someone thought they were owed on the way out the door.
Get the structure right, document it properly, and make sure what you tell people in the interview room matches what's actually in the paperwork.
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Sophia Herd, Senior Associate, has contributed to this legal update.