The Form and Term of the Employment Contract in a Startup
For a startup, the team is the main resource, and the legal frame of that resource is set by the Georgian Labour Code. Article 12 regulates the conclusion of the employment contract: it is concluded orally or in writing, for a fixed or indefinite term; where the employment relationship exceeds 1 month, written form is mandatory. A fixed-term contract may be concluded only where one of the grounds named by law exists — for example, the performance of work of a specific volume, seasonal work, a temporarily increased workload or the replacement of an employee temporarily absent.
The law treats chains of fixed-term contracts strictly: if the term of the contract exceeds 30 months, or the relationship continued through two or more successive fixed-term contracts exceeding 30 months, it is deemed concluded for an indefinite term; succession also arises where a new contract is concluded within 60 days of the expiry of the previous one. For startups, the exception for a starting enterprise matters: an entrepreneur whose state registration took place less than 48 months ago is not subject to the restrictions on fixed-term contracts, provided the term is not less than 3 months; after the 48-month period expires, the relationship transforms into an indefinite one. The employer is also obliged to inform a fixed-term employee about existing vacancies, so that fixed-term staff have the same opportunity to take positions under indefinite contracts as other employees.
Remuneration and Liability for Delay
Article 41 sets the rules of remuneration: remuneration is the basic or minimum remuneration, salary or any other remuneration that the employee receives from the employer in return for the performance of work; its form and amount are determined by the contract, and it is paid at least once a month. For each day of delay of any payment or settlement, the employer must pay the employee 0.07 percent of the delayed amount — this rule tightens payment discipline and is an essential element of a startup's financial planning.