Starting a new business: employment law implications

This article first appeared on People Management on 16 August 2024.

Recruitment

Have a clear vision of what role you are recruiting for and draft a job description. This should be detailed and focused on the skills and experience needed – ensure it is objective to avoid any discrimination (you will need to comply with the Equality Act 2010). Once the application process has finished, you’ll need to go through a selection process to find the right candidate. Ensure the process is fair and consistent.

Offer of employment

Once you’ve found the best candidate, make them a written job offer. The offer usually details:

• Job title and role

• Location (Office? Remote? Hybrid? Note that the right to request flexible working is now a day one right and will likely become the ‘default’ once Labour’s Employment Rights Bill is in force)

• Salary and other benefits

• Whether the offer is subject to conditions (eg, receipt of references, evidence of right to work in the UK, evidence of qualifications, etc.)

• Deadline for acceptance.

Employment contract

Once the offer has been accepted, an employment contract should be prepared. Employees are entitled to a ‘written statement of particulars of employment’ not later than their first day of work, however we’d ordinarily advise preparing a more detailed contract.

There are a number of particulars that must be provided to an employee (things like pay rate, hours, paid leave entitlement etc.) so it’s usually best to get specialist legal advice on the contract to ensure that not only are the legal requirements met, but the business is properly protected (eg, protecting confidential information/intellectual property, potentially imposing post-termination restrictions on an employee after termination etc.).

Note that under Labour’s proposals to introduce protection from unfair dismissal from ‘day one’ (subject to probationary periods), having a contractual probation clause which allows the employer time to assess the suitability of the employee is likely to be crucial.

Policies

There are certain mandatory policies which must be in place – eg, disciplinary rules and grievance procedures – but it is sensible to have a wider range of policies to ensure the smooth running of the business by setting out expected standards and responsibilities. It’s usually sensible to have the following policies:

• Disciplinary

• Grievance

• Whistleblowing

• Health and safety

• Equal opportunities (and/or anti-harassment and bullying)

• Capability

• Sickness absence

• Leave entitlements (holiday, maternity etc.).

Ongoing responsibilities

You’ll need to become familiar with the minimum employment rights in England (note these are likely to increase when Labour introduces its Employment Rights Bill). For example, rights to minimum wage, minimum holiday and parental leave/pay, protection from discrimination, restrictions on working hours etc.

You must comply with the minimum requirements otherwise there is a risk of an employment tribunal claim (which can be financially and reputationally damaging). You should also make sure that you are regularly checking in with your employee(s) and conducting appraisals to address any issues as they arise.

Although the above might sound like a lot of upfront work, it’s much better to put the groundwork in place at the outset to secure a successful relationship moving forwards. Once employee relations issues crop up, they can become incredibly expensive and time-consuming. Putting your business in the best possible position at the outset will help mitigate legal risks.