Although it might not be at the forefront of every entrepreneur’s mind, learning about the law before launching a business is critical. While the creative juices are flowing, taking the time to understand basic business and employment law is vital.
As your business starts to grow, you’ll inevitably reach the stage where you’ll need to hire more employees to take on the workload. If you don’t know the law, you could be faced with legal action and end up in a tribunal, which can be damaging to a company you’ve worked hard to build.
While hiring the right talent for the job should be your priority, knowing the legalities of hiring staff is equally, if not more, important.
In this article, we highlight some of the essential employment laws you need to familiarise yourself with. It’s important to note that the law changes from country to country: Jersey law, for example, is different to UK law and, within the UK, each country may have independent laws individuals must abide by. Wherever your business is based, it’s vital that you learn the local laws and, of course, if your company expands, you need to acquaint yourself with the law in the new country (or countries) you operate in.
The first employment laws you should familiarise yourself with are those that concern hiring employees. The hiring process should be fair, which means you cannot discriminate during the employment process. Understanding what constitutes discrimination should be a priority for not just hiring employees, but dismissing them too.
A case against a firm of solicitors in 2017 found that its use of psychometric tests during the hiring process was discriminatory. The firm did not make reasonable adjustments for the applicant, who had Asperger’s syndrome, to take the test in a different way, despite the applicant asking. This put the applicant at an unfair disadvantage and, after taking the case to a tribunal, the applicant received compensation and the firm was made to review it’s recruitment procedures.
This is just one example of how you need to be aware of discrimination during the hiring process.
For new businesses, creating employee contracts is essential. New employees will expect a contract that outlines important details such as their salary, probationary period, pension and working hours. Having this in writing can be used as a point of reference when it’s needed.
Dismissing an employee should always be the last resort for an employer. However, if the time comes when you need to consider letting an employee go, you’ll want to know the law before you make any decisions. Employers need not just be aware of the process of dismissal — they must also have a valid reason for dismissing the employee.
As noted above, discrimination during dismissal can lead to a tribunal. That being said, there are a number of other reasons for dismissal that are classified as ‘unfair’, such as any reasons related to pregnancy or maternity, or whistleblowing. These can be contested in a court of law.
To protect yourself and your business, ensure you dismiss an employee fairly or constructively. Take the time to educate yourself on what classifies as fair and constructive — if you don’t, you could find yourself in a tribunal, which could cause irreparable damage to a small business.
Employee Rights in the Workplace
Employees have numerous rights in the workplace. Depending where your business is based, these include, but are not limited to, the right to the National Minimum Wage, the right to statutory holiday and the right to not be treated less favourably for opting to work part-time. It’s vital that you learn the employee rights where you operate and ensure that you’re implementing them.
Expert Tip: Create an Employee Handbook
We encourage all employers to create an employee handbook. Although not a legal requirement, it can provide multiple benefits to both businesses and employees. The handbook will form the basis of informing employees about their rights in the workplace, as well as the company’s policies, procedures and more.
We suggest including the following in your employee handbook:
- Company mission and value: All employees should be aware of what these are. Not only will it help employees do their jobs, but it can also foster a sense of purpose and belonging — especially in new employees.
- Policies and procedures: Include any employment policies that the company has. This may be regarding anything from lunch breaks to health and safety regulations.
- Expectations for employees and managers: Demonstrate what the company expects from the employee. This can include terms of expected conduct and behaviour. It’s equally important to outline what employees can expect from managers, as it keeps colleagues accountable for their conduct and can encourage a healthy working relationship.
An employee handbook can also be referred to during disputes and issues between the employee and employer. If you are unsure about what you should include in your employee handbook, consult a lawyer for guidance.
It’s important to remember that laws change over time. The recent introduction of GDPR meant every firm had to re-evaluate its data protection policies. New laws will continue to come into effect and companies need to stay aware. Keep on top of not just new employment laws, but any business laws that could impact your business. As an entrepreneur, once you have a basic understanding of employment law, you will feel more confident about growing your business, while preventing yourself from getting caught out and potentially facing legal action.
Chris Austin is the head of employment law at Parslows Jersey Law Firm. Chris has represented companies in the court and tribunals in employment law cases.