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Taking On Employees – The Basics

October 11, 2011

Susanna Heley, solicitor, of Sykes Anderson LLP’s Litigation and Dispute Resolution Department discusses the key issues to consider when taking on employees.

There are two things that every employer needs to know about Employment Law: It is complicated and there is a lot of it. Separated into a number of distinct but overlapping areas, employment law is an area in which businesses are most at risk of getting involved in litigation.

Having the appropriate policies and contracts in place from the beginning can be a key consideration in avoiding future problems. Here are a few useful pointers to help you reduce the risk of a claim.

Initial Considerations

Employment Law does not begin when a successful job applicant shows up for work. There are many considerations which need to be taken into account long before that first advert goes into the local paper, trade journal or recruitment office.

  • Know who you are looking for and why. Advertising for candidates must not be discriminatory. With the advent of the new age discrimination laws even advertising for a ‘junior’ or ‘experienced’ member of staff could lead to a claim against you.
  • Do not forget about indirect discrimination. Advertising for persons who meet a specific criterion could also be discrimination. Ensure that all criteria can be objectively justified.
  • Establish standard, objective selection criteria when choosing which candidates to interview so that you can evidence the objectivity of the process. Consider a ‘blind’ selection process whereby all personal details are unknown to those involved.
  • Establish parameters for the interview. When inviting candidates ensure that disability discrimination legislation is considered. If your interview room is inaccessible or has fluorescent lights or other features which may be associated with disability discrimination, consider informing candidates and asking them to notify you if this is likely to be a problem.

The Job Offer

  • When offering the job consider the terms to be offered:
    • Is a fixed term contract appropriate? Remember that a fixed term contract can be both a benefit and a burden, particularly if the employee does not live up to expectations.
    • Is a probationary period necessary or desirable?
    • What package should be offered and should this be phased in over time or begin immediately?
    • Pensions – if you do not have an existing company pension scheme what pension provisions will you offer? Remember that you are required to deal with pensions in the contract.
  • The job offer should contain sufficient information for the candidate to assess the role. In many companies, the offer letter performs a multiple role and is a statement of terms and contract of employment. This should be avoided and a proper contract of employment should be drafted, particularly for senior staff, managers and directors.

The Contract of Employment

In the general confusion caused by the raft of statutory protection for employees, the contract of employment in itself is often overlooked. Do not forget that a contract of employment is a contract like any other and you are obliged to fulfil your obligations under it otherwise you could be faced with a claim for breach of contract.

  • The contract should be drafted by a professional. It is imperative that the contract covers all of the appropriate matters and does not include matters which should more properly appear in the office manual.
  • There are statutory requirements for a statement of terms or contract of employment which must be included.
  • Consider the job that the employee is to do and the remuneration offered, be wary of contractual bonuses, commission payments and obligations to increase or review salary annually.
  • For more senior employees or those in a privileged position ensure that adequate provision is included for:
    • Confidentiality
    • Fidelity – including adequate post termination restrictions
    • Notice Periods – consider Payment in Lieu of Notice options and garden leave
  • Remember that it is not easy to vary a contract of employment and ensure that any provisions or policies requiring a level of flexibility are left in the discretion of the employer.
  • Where applicable, ensure that collective agreements are adequately incorporated into the contract.

A Mutually Beneficial Relationship?

The employment relationship should be rewarding for both employer and employee however many relationships fail and turn sour. A few final points for you to watch out for:

  • Grievances. Every employer is required to have a 3 step disciplinary and grievance procedure in place. Ensure that personnel and managers can recognise grievances and always take them seriously and investigate properly.
  • Bullying. Whilst it has been commonly assumed that bullying in the work place is only actionable if based on discrimination, this position has changed. Employers can be vicariously liable for the actions of bullies in the workplace under the Protection From Harassment Act 1997. Ensure that procedures are in place to prevent bullying and that any bullying is dealt with quickly and fairly.
  • Fixed Term Contracts: Failure to renew a fixed term contract can amount to unfair dismissal if the correct procedures are not followed. Bear in mind that successive renewals of fixed term contracts bringing the period of employment over 4 years will lead to the fixed term being deemed permanent.
  • Temporary Workers, Contractors and Consultants: This class of workers is often overlooked as a source of potential dispute however employers should be aware that they may be held vicariously liable for the actions of such workers and ensure that they are properly supervised.
  • Deductions from Pay and Equal Pay: Many employers still fall foul of the provisions preventing unlawful deductions from pay and the Equal Pay Act.
  • Holiday and Sick Pay: Ensure that a clear and consistent policy is in place. Remember, if there is no policy in place, Statutory Sick Pay will apply.

And Finally…

Dismissal is the cause most problems. If you are considering any dismissals for any reason seek legal advice before taking any steps!

Please note that this area of the law is a complex subject and you should not take or refrain from taking any step without full legal advice on your particular circumstances. The content of this article is of a general nature and no liability is accepted in connection with it or if any reliance is placed on it.