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A Small Business Owner's Guide to Employment Law

You may have been running a business for a while now and have just about got to grips with the various laws relating to insurances and taxes for yourself, but are now about to enter a whole new legal sphere: employment law.

When it comes to hiring your first employee, it is vital to learn and adhere to the rules surrounding employee rights, contracts, health and safety and disability discrimination. With so many laws relating to employees, it is easy to become overwhelmed and confused.

So let’s take a look at how to ensure your business complies with employment laws.

23 November 2015
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Statutory Rights

All employees are provided certain entitlements that are set out by legal statute. These provide almost all employees with numerous rights. Certain rights only fail to apply if an employee has only worked for a limited period of time or if they belong to an excluded group of workers.

These basic rights include:

  • The right to be given a written statement of employment terms within two months of commencing work.

  • The right to receive an itemised pay slip from the day the employee commences employment.

  • The right to receive the national minimum wage. Currently, this is set at £6.70 for employees 21 and over, £5.30 for those between 18 and 20, £3.87 for under 18s and £3.30 for apprentices. This right begins from the employee’s first day of work.

  • The right to not receive any illegal and unauthorised deductions from pay. Authorised pay deductions include income tax, national insurance contributions and those authorised by the employment contract after having received written notification from the employer and written consent has been given. This commences from the first day of employment.

  • The right to paid holiday. The standard full-time working week is 37.5 - 40 hours and employees working these full-time hours are entitled to at least 28 days holiday (20 days +8 bank holidays). Part-time employees are entitled to a pro-rata amount of holiday days.

  • The right to statutory sick pay (SSP). Many employees are entitled to sick pay once they have been sick for at least four consecutive days. The weekly rate for SSP is £88.45 and employees can receive this for up to 28 weeks.

Health and Safety

Although covered in statutory rights, it is important to stipulate what rights employees are entitled to. Under health and safety law, employees are restricted to work a maximum of 48 hours a week. This right applies from the day employment commences.

Employees are also protected under health and safety laws to daily and weekly rest breaks. Special rules also surround night workers. This right commences from an employee’s first day of employment.

Discrimination

Employees also have the right to not receive any discrimination based on disability. An employer cannot, therefore, dismiss an employee, or base training, recruitment, pay and benefits, promotion and transfer opportunities, redundancy or employment terms and conditions on any form of disability.

Contracts

The start of a business relationship may begin with a verbal contract between an employer and employee that then progresses to a written contract.

This contract of employment sets out the employee’s rights, duties, responsibilities and employment status and conditions. It is necessary for both parties, the employer and employee, to sign and date this contract. The employee should raise any concerns or questions to clarify clauses prior to this to make sure both parties understand and accept the terms of employment.

Self-employed/ Freelance workers

Freelance workers are classified as self-employed rather than employed, and, therefore, have different rights and entitlements to employees as they are not classified as such.

Although freelance workers are still entitled to some rights such as the right to not be discriminated against and the right to work in a healthy and safe environment when on a client’s premises, they do not receive certain rights such as holiday pay entitlement.

In addition, they are often responsible for their own taxes and insurance and must submit their self-assessment tax return to HM Revenues and Customs (HMRC) annually.

For further information and advice on how you can make sure your company complies with employment law, please get in touch for a free consultation. Guillaumes LLP offer a breadth of support for small businesses, including our commercial lease solcitors and business disputes lawyers. Start the next chapter of your business journey with Guillaumes today.