Employment Law essentials for small business owners

UK Business owners need to be aware of multiple factors when it comes to employment law. As with all things legal, failure to adhere to legislation and follow the correct guidance can be the catalyst for costly legal proceedings against your business. This can be both financial and reputational.

Ignorance of the legislation is not a valid reason for failing to follow proper procedure if taken to an employment tribunal. So, to ensure your business avoids this scenario, it is vital that you get the correct advice from an employment law professional.

Croner has been in operation for 80 years providing small to medium businesses with expert employment law and HR advice. Call today on 0808 501 6651.

Basic legal obligations before and during the hiring process

Your legal obligations as an employer start before the hiring process begins, this includes the following:

• Employers’ liability insurance with at least £5 million in cover from an authorised insurer.
• Register your business with HMRC before employing anyone.

In addition to the above points, during the hiring process employers should ensure that they adhere to the following processes to remain in compliance with UK law:

• A person specification and job description outlining the key objectives of the role alongside the key qualifications and skills required.
• A fair and consistent application process for candidates, followed by fair and consistent interview process.

Note: To maintain fairness and consistency, each candidate must be assessed by the same panel, using the same criteria. In addition, a detailed paper trail should be kept to navigate any complaints or litigation.

Upon moving forward with a successful candidate employers should ensure that they adhere to the following processes:

• Conduct right to work checks before the candidate’s employment starts.
• Provide a written statement of employment to any new starters, providing they are to be employed for over a month.
• Ensure that workers are paid at least the National Minimum Wage.
• Provide a pension for all workers over 22 years of age earning £10,000 and over.

Employers should provide  new starters with a section 1 statement of employment upon commencement of their role. This should outline the key terms and conditions of the worker’s employment, including start date, hours and location of work, holiday entitlement, pay and notice period. It is highly recommended that this is provided in a contract of employment.

Ensuring that you cover these bases will help avert the risk of falling foul of the law when it comes to the hiring process.

Differences between worker statuses relating to UK employment law

There are several different statuses when it comes to the workforce that employers should familiarise themselves with. This will determine several things regarding their hiring, from their contract type to the way they’re paid, through to certain statutory rights like holiday entitlement etc.

What are the types of employment status?

The types of employment status under UK employment law are as follows:

Employee:

Employees are classed as anyone working under a contract of employment. Employees are paid via PAYE.

Worker:

This is the most casual type of employment and includes those contracted under a ‘Contract for the personal performance of work’.

Self-employed/Independent contractor:

If classed as self-employed or as an independent contractor, then they have control over the work that they do and the hours they work. Those who are self-employed are typically paid in gross earnings and are responsible for paying their own National Insurance and Tax.

It is important to bear in mind that utilising self-employed workers, that imposing certain obligations under contract can influence their employment status and shift them into the worker bracket. You are also obligated by law to ensure the health and safety of independent contractors whilst they are contracted to your business.

Employment law regulations

As an employer there are several regulations that you need to adhere to when it comes to staying legally compliant.

National Minimum Wage:

You should ensure that all staff are paid at least the National Minimum Wage, as failure to do so is classed as a criminal offence. HMRC can demand that arrears be paid immediately by any businesses found in breach and have the power to request payment records at anytime to check that companies are adhering to the law.

In tandem with this, HMRC can take your business to court regarding breaches of the National Minimum Wage, alongside employees also launching employment tribunal claims against your business.

Workers’ rights regarding hours breaks and holiday

Under The Working Time Regulations 1998 employees are entitled to:

• A work week of 48 hours unless they opt out.
• An unpaid 20-minute break when working hours exceed 6 hours.
• A rest of 11 hours between working days
• An uninterrupted 24-hour weekly break (or 48 hours each fortnight).
• 6 weeks’ paid holiday per annum, inclusive of bank holidays.

Employers can offer more entitlement when it comes to holiday allowance and breaks, however they cannot offer less than that outlined in the regulations. Doing so would be considered a breach of employment law and would be subject to costly legal action.

Disciplinaries and grievances, compliance with the law

Whilst disciplinaries and grievances are uncomfortable for both employers and employees, following a compliant process is a must, as this can result in both financial and reputational damage to your business, unless these are handled correctly.

Regarding both disciplinary and grievance procedure, these are outline under the ACAS code of practice. The code outlines what employers, in both instances, should:

• Conduct a reasonable investigation into the incident.
• Establish the facts before any action is taken.
• Write to the employee addressing the allegations, outlining potential consequences and evidence gathered.
• Conduct a formal hearing and communicate the employee’s right to be accompanied by a colleague or trade union representative.
• Communicate the confirmation of any decisions in writing.
• State the employee’s right to appeal the decision.

Termination of contract notice periods and severance

Upon termination of an employee’s contract, you should follow the notice period outlined in said contract, as this could be cause for the employee to make a claim to an employment tribunal. Regarding the law, the statutory notice an employee is entitled to is as follows:

• Less than a month – No notice required.
• 1 month to 2 years – 1 week.
• 2 years plus – 1 week per year of employment.

Be mindful of the changes regarding unfair dismissal outlined in The Employment Rights Bill. This means that terminating an employee’s contract should only be done for a fair reason and following a fair and compliant process.

Need further advice on employment law?

Contact a Croner expert today to get tailored advice for your business on any area of employment law. Ensure compliance with the latest legislation and avoid costly litigation.

Call 0808 501 6651.