Taking on an employee: What you need to know

The time has come to spread your wings from a solo enterprise to a growing business with staff. Taking on an employee is a huge step, however, so where do you start and how do you ensure you stay on the right side of the law? Workingmums.co.uk looks at the advice.

The time has come to spread your wings from a solo enterprise to a growing business with staff. Taking on an employee is a huge step, however, so where do you start and how do you ensure you stay on the right side of the law? Workingmums.co.uk looks at the advice.
 
Where do you start?
Prue Watson, policy adviser at the Federation of Small Businesses (FSB) says that regulation is the biggest barrier to growth for a third of small businesses.
 
“A small business will often say it is not a single piece of regulation that hinders their plans to take on a new member of staff but rather the whole raft of regulation, so it can be very difficult to know where to start.  There is a raft of help, small businesses can get, such as advice from their lawyer or even their accountant as well as government funded websites.”
 
As a starting point it is a good idea to make yourself aware of the legislation that protects employees. 
 
What employment law should you be aware of?
Prue says that maternity and paternity law, the right to training, equalities legislation and pensions are all issues that act as barriers to taking on a first member of staff. 
 
“Small businesses need to have easy access to what regulations and laws affect them. None of this information has been translated into easy to read business language so the FSB urges the Government to ensure that all laws and regulations are clearly set out and accessible for small firms,” says Prue.
 
A good place to start is Directgov.co.uk but you should be aware from the outset that a claim for discrimination can arise from the earliest stages, at hiring level so you need to be aware of how you conduct an interview and or/assessment and that you select on a justified basis.
 
Employees are also entitled to basic rights at work. An employee’s rights will depend upon statutory rights and the contract of employment. Note, however, that the contract of employment cannot take away the rights that an employee is afforded by law. If you want to give rights over and above the minimum set by law then what appears in the contract will apply.
 
Basic rights include:
  • the right to time off for trade union duties and activities.
  • the right to paid time off to look for work if being made redundant.
  • the right to time off for study or training for 16-17 year olds. This applies from the day the employee starts work.
  • the right to paid time off for ante natal care. This applies from the day the employee starts work.
  • the right to paid maternity leave.
  • the right to ask for flexible working to care for children or adult dependents.
  • the right to paid adoption leave.
  • the right to ask for flexible working.
  • the right to take unpaid parental leave for both men and women (if you have worked for the employer for one year) and the right to reasonable time off to look after dependants in an emergency (applies from the day the employee starts work).
  • the right under Health and Safety law to work a maximum 48 hour working week. This applies from the day the employee starts work.
  • the right under Health and Safety law to weekly and daily rest breaks. This applies from the day the employee starts work.
  • the right not to be discriminated against on grounds of sex, race, disability, sexual orientation, age, religion or belief or gender reassignment. This applies from the day the employee starts work.
  • the right to carry on working until you choose to retire. Note that workers will no longer be forced to retire at the age of 65 https://www.workingmums.co.uk/working-mums-magazine/news/page_4/1193536/default-retirement-age-of-65-to-be-scrapped.thtml from October 2011.
  • the right to notice of dismissal, provided you have worked for your employer for at least one calendar month.
  • the right to written reasons for dismissal from your employer, provided you have worked for your employer for one year. Women who are pregnant or on maternity leave are entitled to written reasons without having to have worked for any particular length of time.
  • the right to claim compensation if unfairly dismissed. In most cases you will have to have worked for one year to be able to claim unfair dismissal.
  • the right to claim redundancy pay if made redundant. In most cases you will have to have worked for two years to be able to claim redundancy pay.
  • the right not to suffer detriment or dismissal for ‘blowing the whistle’ on a matter of public concern (malpractice) at the workplace. This applies from the day the employee starts work.
  • the right of a part-time worker to the same contractual rights (pro-rata) as a comparable full-time worker.
  • the right of a fixed-term employee to the same contractual rights as a comparable permanent employee.

 
Issuing a contract of employment:
Once you’ve found your first member of staff and got to grips with the legislation the first thing to sort out is their employment status so you need to understand whether your recruit is self-employed, a casual worker, or a bona fide employee. This is important because many of the regulations that are stated above only kick in if the new recruit is an employee.
 
If you are taking on an employee then you will need to have a contract between yourself and the new member of staff. Even if you don’t have anything in writing, a contract will still exist. As an employer, however, you are obligated to produce a written statement of terms and particulars within two months of the person starting work.
 
Paying the employee:
You will have already agreed a starting salary and detailed this in the written statement of terms and particulars and now you need to set them up on the payroll.
 
All employees are entitled to an itemised pay slip which applies from the day the employee starts work.

Employees are also entitled to receive the minimum wage – for details see www.hmrc.gov.uk/nmw. Each time you pay your employee you must calculate and deduct the correct amount of tax and National Insurance contributions from their pay and provide them with a payslip. You must also calculate and pay an Employer’s National Insurance Contribution. You must then pay these amounts to HM Revenue & Customs either on a monthly or quarterly basis. For further advice see HM Revenue and Customs: http://www.hmrc.gov.uk/employers/employing-someone.pdf
 

How should you assess their performance?
By now your employee should be on board with an agreed contract and regular wages being paid through the payroll so it now falls to you to assess their performance. Prue says: “It can be difficult for small firms to assess their staff, especially their first new recruit.  A small business does not have the luxury of an HR department who can help with staff appraisal systems, objectives and training development needs.” Prue says that in this case performance is assessed in a much more informal way:   “A small business owner will rely on constructive praise and criticism in an informal setting. Likewise, on training this is traditionally carried out on the job, often by a colleague or the employer, to best suit the needs of the business and the employee.”   
 
Can you really sack an employee in the first 12 months without any legal repercussions if they’re not working out?
Sadly the new recruit may not work out and through ongoing assessment and development you may come to the conclusion that you need to let them go. Sacking someone however, brings up many rules and regulations that you need to be aware of. Prue says: “All employees have legal protection against unfair dismissal after a year’s continuous work, regardless of the number of hours they work. There are five statutory reasons for dismissal – conduct, capability, retirement age, redundancy and legal requirements. If an employer dismisses their staff for a different reason to these, they could be taken to an employment tribunal.
 
“Dismissals on grounds of sex, race, sexual orientation, religion or belief, and disability, or for any of the reasons below, are automatically unfair, even if an employee has less than a year’s service.”
 
For further advice on how to sack someone see: http://www.acas.org.uk/index.aspx?articleid=1797
Good luck!





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