There’s nothing more thrilling than starting a business. But dealing with staff comes with its hurdles. Employment law comes into force on day one in the UK. A lot of these rules get overlooked by startup founders. Ignoring such fundamental issues can result in problems of a sizable nature.
To mitigate unnecessary risks, every founder must know the essential pointers.
Why Employment Law Matters from the Start
Even if your team is small, the law still applies. To put it simply, rudimentary law cannot be bypassed just because of your business size. The scope of UK employment legislation impacts all individuals. This is especially relevant for part-time workers, freelancers, and temporary employees.
The dangers include potential legal action if you are found non-compliant. Legal issues can damage brand reputation and are costly. And sometimes even shut the business down.
Written Contracts Are Not Optional
Whether in full time or part-time employment, a written statement of terms, “written particulars of employment” must be issued. Provide it on or before their first day- this is not an option.
Important particulars which need to be mentioned in the statement include:
- Job title and description
- Start date and working hours
- Pay and pay schedule
- Notice periods
- Holiday entitlement
- Sick leave and other benefits
Don’t download a free template and hope it fits. Each role is different. Customise contracts to suit your needs. If unsure, consult professionals like gordon turner employment lawyers for advice.
Understand Employee vs Freelancer
Classifying employees as freelancers can appear tempting. Tax and employee benefits are sidestepped. But if the structure resembles employment, the HMRC can view them as employees.
To avoid misclassification, ask:
- Do you control how, when, and where they work?
- Can they send someone else to do the work?
- Do they use your tools or equipment?
If the answer is “yes” to most, they may count as employees, which means you’ll have to pay for their taxes, pensions, and legal rights. Misclassification leads to paybacks and punitive fines.
Key Employee Rights
From the moment someone joins your team, they gain certain rights. These rights grow over time. Here are some that apply from day one:
- National Minimum Wage – Pay must meet legal standards.
- Paid Holiday – Full-time workers get 28 days per year.
- Rest Breaks – Staff must have breaks if they work over six hours.
- Safe Work Environment – You must keep staff safe from harm.
After two years, employees gain extra rights. These include protection from unfair dismissal and redundancy pay. Don’t wait that long to follow the rules. Respect all rights from the start.
Hiring and Discrimination
You can’t reject someone based on age, gender, race, disability, religion, or sexual orientation. This applies from the recruitment stage.
Your job adverts must not show bias. Interview questions must be fair. Don’t ask about plans to have children or health issues unless needed for the role.
If a candidate or employee feels discriminated against, they can file a claim. This could go to a tribunal. Even if you win, it costs time and money.
Handling Dismissals
Letting someone go is never easy. But it must be done right. UK law sets clear steps for fair dismissal.
You need a valid reason. This could be:
- Misconduct
- Lack of ability
- Redundancy
- Legal reason (like losing the right to work in the UK)
Even with valid reasons, you must follow a fair process. This often includes:
- Written warnings
- A chance to improve
- A formal meeting
- Clear communication
Skip the steps, and you risk a claim of unfair dismissal. That’s why it helps to get advice before acting.
Data and Privacy
Your employees’ data must be stored and used properly. Under the UK GDPR, you must:
- Keep data safe and secure
- Only collect what you need
- Be clear about how data is used
Delete data when no longer needed
Staff have the right to see the data you hold. They can ask you to fix errors or delete their records. Breaking these rules could cost you a lot in fines.
Pensions and Pay Slips
By law, you must enrol most workers in a pension scheme. This is called “auto-enrolment.” You must also:
- Pay employer contributions
- Keep pension records
- Let staff opt out if they choose
You also need to give itemised pay slips. These must show gross pay, deductions, and net pay. They must be given on or before payday.
Missing or unclear payslips are a common issue. They can lead to disputes or legal trouble. Use proper payroll software or hire a provider to stay on track.
Flexible Working and Parental Rights
Employees can request flexible working after 26 weeks. You must consider these requests fairly. You can say no, but only for valid business reasons.
Parents have extra rights. These include:
- Maternity and paternity leave
- Shared parental leave
- Time off for emergencies
Make sure your policies cover these areas. Put them in writing. Train managers to apply them fairly.
What Founders Should Do Now
Here’s a simple checklist for startup founders:
- Draft clear employment contracts
- Define each worker’s status correctly
- Set up payroll and pensions
- Write a staff handbook
- Train your team on policies
- Seek expert advice when needed
Many issues arise from poor planning. Startups move fast, but the law still matters. It’s way cheaper to stop problems before they start.
Final Thoughts
Hiring your first employee is a major step. It adds legal duties and risk. But it also creates a strong base for growth. To avoid problems, follow the law from day one. Don’t cut corners or rely on guesswork. Poor handling of staff issues can cost time and money.
Plan well, write clear policies, and stay organised. If you’re unsure about your next move, speak to a qualified legal advisor. Getting the basics right early will protect your startup as it grows.