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Growing your business – employing staff

02 Dec

Sneak preview of the image from my new bookWhen you decide to grow your business, one popular way to do this is to employ staff. You can either take on people to do your admin, reception duties, sales, etc., or to do the actual work that you do. In this article, I’m going to talk a little about the advantages and disadvantages of taking on staff, and then we’ll hear from Duncan Brown, an expert on employment, who will talk us through the things we need to think about from a legal perspective when employing staff.

Advantages of employing people

  • Someone else can cover the admin while you concentrate on doing the job that makes the money
  • You can bring people in who have different skills to yours – in sales, for example
  • You’re not on your own; you will have an office full of people to bounce your ideas off
  • If you’re an extrovert, you can recharge by having people around you
  • Skills and positions can be covered and you might even get to take a holiday yourself!

Disadvantages of employing people

  • Someone has to manage them – will that be you?
  • You need to be aware of the rules and regulations – even if you employ an HR firm to deal with that side of things
  • You’re responsible for looking after these people physically, psychologically and financially
  • Related to the above, if things get tight, you can always not pay yourself – but if you’ve got staff, you need to make sure that you can pay them. I have seen firms founder and have to lay people off on this issue.

Key tips on employing staff

by Duncan Brown

When a person accepts a job offer from a potential employer, a contract of employment is created between the parties. An offer of employment does not have to be in writing to be valid.  However, it is best practice for offers of employment to be in writing and swiftly followed up with full written terms of the contract.

Irrespective of what form of legal entity an employer takes, i.e. Sole Trader, Partnership or Company, an employer must provide each employee with a “written statement of employment particulars” if the employee’s employment contract lasts at least a month or more. The “written statement” is not the employment contract, but is must include the main conditions of employment.  An employer must provide a “written statement” within 2 months of employment commencing.

Businesses must be aware that an employment contract places a set of obligations upon each party.  If an individual trades as a “sole trader”, that individual is the employer.  If the business is a partnership each partner is legally the “employer” of each employee, and each partner owes a duty under the contract to each employee. If the business is a Limited Company, the owners of that Company, i.e. the shareholders ultimately owe obligations to the employee.

Even if an employment contract is created verbally between the parties, the employer must still provide the employee with the “written statement”, which must include as a minimum:

  1. The name of the employer.
  2. The employee’s name, job title or a description of work, and start date.
  3. If a previous job counts towards a period of continuous employment, the date that period started.
  4. How much and how often the employee will be paid.
  5. Hours of work (and if the employee will have to work Sundays, nights or overtime).
  6. Holiday entitlement (and if that includes Public Holidays).
  7. Where the employee will be working and whether they might have to relocate.
  8. If the employee works in different places, where these will be and what the employer’s address is.

Items 1 to 8 are known as the “principal statement”.  The “written statement” must also contain information about:

  • How long a temporary job is expected to last.
  • The end date of a fixed term contract.
  • Notice periods.
  • Collective agreements.
  • Pensions.
  • Who to go to with a grievance.
  • How to complain about how a grievance is handled.
  • How to complain about a disciplinary or dismissal decision.

The “written statement” doesn’t need to contain the following information, but it must state where that information can be found, e.g. in a staff handbook:

  1. Sick pay procedures.
  2. Disciplinary/dismissal procedures.
  3. Grievance procedures.

If an employer doesn’t provide a “written statement” to an employee within 2 months of their employment commencing, that employee can commence a claim against the employer in an Employment Tribunal.  Employment Tribunals are usually expensive, time-consuming and stressful for employers (and also a potential PR ‘disaster’ because most local newspapers cover hearings at their local Tribunal!).

The Law implies certain terms into employment contracts, e.g. employees must not steal from their employer, each employee has a legal requirement to be paid at least the national minimum wage, etc.

An employment contract will be illegal if it is for an immoral or illegal act, e.g. prostitution, or if the employer pays part or all of the wages cash in hand and tax/NI contributions are not paid on the wages when they should have been, and the employee knew they were being paid cash in hand to avoid paying tax/NI contributions.

Solicitors can provide employment contracts and staff handbooks, often for fixed fees.  They can also provide employment law documentation, e.g. annual appraisal forms.

Competently drafted staff handbooks contain sufficient details on the terms and conditions of employment, to cover most eventualities.  They can also explain individual employer policies, e.g. email, fax & internet policies. Competent handbooks should contain the employer’s drugs and alcohol policy, and an equality policy.
The more detail in the written terms of the employment contract the more certainty there is for both employee and employer, hopefully resulting in fewer disputes (and thereby reducing costs, complications and possible employment tribunal claims for all parties concerned).

Businesses must bear in mind that employing staff is an onerous duty, especially for sole traders and partnerships, because sole traders and partners are personally liable for claims brought by their employee, e.g. for breaches of contract, for discrimination (e.g. sex discrimination), etc.

Duncan BrownDuncan Brown prides himself on being an approachable solicitor, who believes in providing clients with succinct, practical and commercially focused advice. His ethos is to take over the management of a dispute from clients, enabling them to concentrate on running their organisations.  He specialises in commercial disputes including employment law, landlord & tenant and building defect claims. He possesses niche experience of the Technology & Construction Court, Employment Tribunal, Property Chamber & Alternative Dispute Resolution.

Duncan works for Oliver Legal. Oliver Legal have a LinkedIn page, too, and Duncan can also be found on LinkedIn.

Thank you, Duncan, for those handy pointers on UK employment practices.

Have you taken on staff to expand your business? I’d love to hear your stories and your advice to add to a linked post on this important subject. Drop me a line via the comments below, or click on my Contact page: I look forward to hearing from you!

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This post is part of my series on growing your business. Read more here and read about my own business journey in my book, Going It Alone At 40.

 
4 Comments

Posted by on December 2, 2013 in Business, Guest posts, Organisation

 

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4 responses to “Growing your business – employing staff

  1. Kate Millin

    December 2, 2013 at 12:01 pm

    Another option is to pay another small business to do some of these roles for you – will this be another subject that you will cover? I am thinking of a mobile PA or book keeper.

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