Court Today: Why ErgoGroup Will Lose, No Matter What

As I have mentioned earlier in my constant nagging about why ErgoGroup sucks, today is the day when I meet ErgoGroup in court. In case you can’t be bothered to read the entire thing, the short story is that they screwed me for close to 60% of my salary and claimed that if I quit I wasn’t entitled to that money. Of course, they only told me that after I quit.

So, today we face off in a legal battle, facilitated by my insanely skilled lawyer, to once and for all to determine whether they are right in changing the rules of the game after they have lost. I’ll let you in on a secret, though and show you why ErgoGroup will lose that case, no matter what.

You see, the elusive standard terms that ErgoGroup presented to me only after I quit mentions that if ErgoGroup as a company makes less than a certain amount of profit, then no employees get bonuses at all. Let’s look a bit closer at what that means.

First of all, the payment that an employee gets depends on ErgoGroup not screwing up. For many employees, like myself, the bonus is a large part of our salary, so basically, we’re betting that ErgoGroup doesn’t fumble something up. If they do, we can kiss our payment goodbye, at least a large portion of it.

This is called risk. It is a risk that employees with the bonus model are forced to accept.

However, there is no upside to taking this risk. There’s no clause that says that if ErgoGroup makes a truckload of money, then all employees get an added bonus.

The only possible outcomes is that you either get what they promise you or you get nothing.

Did I mention that you have no choice about whether to accept this risk?

This closely resembles what political discourse calls “privatizing profits and socializing losses”. If the company earns billions, the owners get the benefit while the employees only get what they’ve been promised, but if the company doesn’t (or in this case only makes millions) then the employees bears the burden and loses their salaries.

The second thing is what I wrote in parenthesis above. If ErgoGroup only makes a few million dollars each year, the employees still doesn’t get their full salaries. The profits of the company needs to exceed a certain number of millions dollars, not just be profitable.

If I were a business owner with these terms, I’d make damn sure the company was profitable only by just enough so that I didn’t need to pay the employees.

It should be good news, to employees at least, that ErgoGroup reported increased earnings in Q2 of 2010. I would be happy too, were I an employee, at least as long as the millions kept rolling in past the magic ‘no pay’ barrier. I was a bit surprised to read then that despite reporting increased profits, their real reported numbers showed a loss in ErgoGroup for Q2 (Norwegian only, but check out page 10, I’m sure you can understand that numbers in parenthesis are losses, not profits).

The explanation is that ErgoGroup is merging with another IT giant in Norway, and there are additional expenses in Q2 related to that merger, and actually for the rest of the year, that are one-time effects, expected to generate increased profit margins in the future.

Of course, that doesn’t help the employees who risks losing their entire bonus this year. It does, however, make sense from ErgoGroup’s perspective. After all, tuning their results to end up just below the no-pay barrier means saving millions and millions in bonus payments. Please note that I don’t think ErgoGroup would do such a thing on purpose, but it does show the ridiculous terms they force employees to accept, taking all the risk without any possible upside.

Because I am a gentle and loving soul, I’ll explain to you, and ErgoGroup, why this entire idea is completely bonkers. Also, it should show potential investors why the company would go into a death spiral if profits approach the magic no-pay barrier.

People like me love work. I work my ass off, rarely working less than 15 hours each day, including weekends. That would mean, if I still worked for ErgoGroup, that I’d be bringing in a ton of money. Heck, in October of the year I worked for them, I clocked in 310 hours of work, which, if billed properly, would give the company over 60,000.00 US dollars.

Note: By the terms on which I accepted the job, I would get 40% of that, or 24K US dollars. I ended up getting roughly 8K, or 33% of what I was promised.

Now, if the company is not doing so well, and who is these days, then there is a huge risk that the company as a whole won’t make the famous number of million dollars in profit, aka the magic no-pay barrier. For me, that means that I won’t get paid for the additional time I put into the company. I love work, but I also love my wife, and if forced to chose between funding my job or staying at home with my wife, well, all other things being equal, I have to admit, I don’t love work that much.

The effect is that, when the company goes badly, employees may feel that the reward for working long hours and helping out is not worth it. Considering there is no reward or even basic salary, I don’t think that’s unreasonable.

Thus, the company loses further valuable income, worsening the situation even more.

Back to the risk and why ErgoGroup will lose no matter the outcome of the court case.

If, by chance, the court rules that presenting the terms of an agreement after the agreement has ended is the right way to conduct business, well, two things will happen. First, the entire legal system of Norway will collapse, and second, I will be forced to accept the standard terms.

You may think that’s bad. I don’t. At least not the second part.

You see, in Norway, there’s an established precedence that taking risks should come with a chance of reward. It is even codified in several laws, including our vacation laws. In the terms that ErgoGroup presented, there is no such reward, but by the deities, there is the risk.

I plan to challenge that if I’m held to the terms. Not just that, but if the ‘forced risk, forgo reward’ terms are found illegal, it affects not just me, but every employee in ErgoGroup that are subject to these terms. In effect, that means that thousands of contracts in ErgoGroup have been illegal all along, and I’m sure you can imagine the legal nightmare that may cause.

Even worse, they may need to renegotiate all their contracts and perhaps end up having to settle with all employees and compensate them for the risk they have been taking for many years, without any chance of reward.

So, if I win, ErgoGroup must pay me. If I lose, ErgoGroup must pay everyone. Or at least risk it.

Did I mention I have an insanely skilled lawyer?

Good luck today, ErgoGroup. You have already lost, so you’ll need it.

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This post was written by who has written 415 posts on Furuknap's SharePoint Corner.

I do SharePoint. When I'm not doing SharePoint, I sleep, and then I dream about SharePoint. Oh, and I dabble a bit in cryptocurrencies (Bitcoin, Litecoin, etc)

Trackbacks/Pingbacks

  1. Why EDB ErgoGroup Is Going Down – Big Time! (Yeah, I Won) | Furuknap's SharePoint Corner - December 29, 2010

    [...] risks falling below the magic ‘no-pay’ barrier that I’ve described earlier. Considering ErgoGroup was losing money before the merger and that the combined EDB ErgoGroup company also lost money in Q3 and have huge [...]

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