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Common causes of employee shareholder disputes

On Behalf of | Apr 4, 2022 | Business & Commercial Law |

If your company allows employee shareholder ownership, there is potential for legal conflict. Depending on what charges emerge, staff unrest could impact your bottom line.

Business owners allowing such participation should be aware of what disputes may arise. Further information can come from a law professional familiar with the topic.

Shareholder agreement breaches

Participating employees sign documents describing what is permissible and outlining their rights. Imagine a competitor gains partial ownership of your operation. If the contract states such sales are unallowable, employees might decide to sue.

Mission disagreements

Those with a voice in business decisions might feel your choices are unwise. Such differences sometimes lead to intractable shareholder feuds, especially in small companies. The interpersonal nature of these conflicts makes them highly combustible.

Overlapping motives

Your company could land in legal hot water because of a conflict of interest. An employee might stand to profit from a rival company learning your trade secrets. You must be careful not to violate privacy rules when investigating contradictory motives. The expectation is that shareholders are open about their financial dealings. When they are not, you might become vulnerable.

Compensation differences

Employee shareholders sometimes believe they are not earning what they deserve. Those who discover they are getting less than someone else might decide to revolt. Firing someone who complains over wage discrimination could become legally precarious.

Allowing employee ownership creates an incentive for staff to continue working hard. The flipside to this is the chance of conflict. Remain aware of the difficulties that might happen.