Employment Law: The Basics Every Business Owner Needs to Know

Starting a business and becoming your own boss can feel overwhelming at times. So too can becoming someone else’s. As well as all the rules and regulations that come with being a business owner, having others on the payroll means you also have to stay on the right side of employment law. Read more for employment law tips every business owner should know.

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The law is deservedly there to protect workers’ hard-won statutory rights, such as the right to be paid a minimum wage, sick pay and holiday entitlement. Separate legislation, including the recently introduced Worker Protection (Amendment of Equality Act 2010) Act also protects employees from unfair treatment at work such as harassment and discrimination. Employment law is vital for employees and business owners.

It’s a lot to get to grips with, particularly for small businesses without HR or legal advice in-house, but it is essential when it comes to protecting not just your employees’ interests but your own.

Start as You Mean to go on

There are certain statutory rights that all employers must adhere to, including the right to receive the national minimum wage, statutory sick pay and the minimum level of paid holiday (usually 5.6 weeks per year). These rights and your responsibilities as an employer are explained in more detail on the government’s website.

When taking someone on, the law also expects you to provide them with a written statement of the main terms and conditions of their employment on or before their first day.

This doesn’t necessarily have to be a contract – as long as that follows within a reasonable period of time – but can be a letter or an email instead. The key is that it contains the headline information such as how much and how often the employee will be paid, where they will be working, their hours and holiday entitlement and details of sick leave and sick pay. There should also be reference as to what the business’s grievance and disciplinary procedures are, such as a link to the company policy or employee handbook.

Putting the Right Policies in Place…

The larger the company, the more likely it is to invest in an employee handbook, sometimes called a staff handbook, which should comprehensively cover every policy and procedure you need. Some are must-haves, such as how holidays, sickness absence, grievances, disciplinaries and flexible working requests are handled. Following the change in working practices brought about by the Covid pandemic, it would also now be wise to add a home working policy to that list.

Other policies, such as those outlining the rules regarding maternity, paternity and menopause leave, are not essential but simply good to have. Additional policies such as these, particularly any that offer enhanced terms beyond the statutory minimum, are also a useful tool when it comes to attracting and retaining staff.

While you may choose to instruct a lawyer to help when drawing up your policies, it is not always necessary. Any HR professional should be able to draft the documents and, if you don’t have your own in-house facility, there are many external providers of HR support. Where the expert eye of a lawyer is useful, however, is when policies do offer more than the statutory minimum as the wording will be different and you should take extra care not to leave yourself open to potential claims.

…And Following Them

Policies and processes are worthless if they are not followed, and it will be this which employees who allege unfair treatment will seek to rely on in any potential claim. Conversely, if you as a company have followed and can show that you have followed your own, formal procedure to investigate complaints, and treat all parties fairly, then that will only strengthen your case.

Best practice is to review all policies on at least an annual basis and more frequently if there are any notable developments in the law. This is easy to say but, in practice, something businesses rarely do.

A timely example of when reviews are necessary is the recent Worker Protection (Amendment of Equality Act 2010) Act, which places a duty on employers to take reasonable steps to prevent sexual harassment of employees in the workplace. While it received royal assent last month, it will be 12 months before the new legislation takes effect, giving businesses ample time to review existing policies and update accordingly.

If you do not have an employee handbook and your business expands, you could also think about creating one.

Communication is Key

Once drafted, it is all too easy to file policies away and forget about them until it is too late. However, it is vital that they are readily accessible so that everyone knows where they stand and how such matters will be dealt with.

As well as making new starters aware of company policies, you should also communicate regular reminders and any updates to all staff and consider learning sessions to ensure that everyone understands what is expected.

Businesses should be aware that it is likely to land them in hot water with a tribunal judge if a claim is brought and they have not kept these documents up to date or, worse still, if no one knows they exist.

Communicating your company’s stance on damaging behaviour such as bullying, discrimination and sexual harassment also sends a clear message to employees that it will not be tolerated in your workplace and, hopefully, will help to prevent it from happening in the first place.

By Hannah Dowd, employment solicitor at Jackson Lees