People & Leadership

Employing people: The legal implications

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Employing strangers can be a big step for business owners who may be used to working alone or with only a select group of family and friends. Alongside the difficulties of finding the right people and interviewing them, there are also legal aspects that you need to be aware of.

Startling stories of big claims by aggrieved employees can shake your confidence when you’re considering employing people, especially when such claims are brought against experienced business owners such as ‘enterprise tsar’ and celebrity recruiter Lord Sugar. The tips below will help you reduce the risks to which you and your business may be exposed. The government also provides some good guides on the Gov.Uk portal.

Reaching out

The recruitment process should be transparent and fair.Claims of discrimination can be brought by disappointed candidates who are not selected for interview or appointment, and an open process which treats each candidate on their own merits will go some way to avoid and, if necessary, disprove allegations of discrimination.

The Equality Act 2010 details which characteristics are protected from discrimination.These extend to: gender, race, disability, religion and belief, marital and civil partnership status, sexual orientation, pregnancy/maternity, age and gender reassignment. There are some guides to the act available here.

Key risk areas are the content of any job advertisement and the application form. You should avoid using such words and phrases as ‘keen young graduate’, ‘strong man’ and ‘fit and healthy’ in any advertisements which will be considered discriminatory. You can only actively discriminate if the ‘protected characteristic’ which you require is truly relevant to the job, for example if you need a female security officer to conduct searches on women.

So long as a fair process is in place and the best candidate for any role is selected, there should be little to worry about.

The right people with the right questions

You are under a statutory duty to ensure that any new recruit has a legal right to work in the UK. Certain jobs will require additional checks. If working with children or in a position of trust a Disclosure and Barring Service (DBS) check will be required.

In an interview, you should not ask questions in an interview which may be considered discriminatory, the same as with the advertising process. You should not, for example, ask about a woman’s plans for a family or if a candidate has particular health complaints (unless it is a requirement of the job).

You should also seek references – personal, professional or both, depending on the role being recruited. It is your own responsibility to check the references and to check on a candidate’s suitability for a job. Once employed, you may be held responsible for the acts (and omissions) of that employee.

On the right terms

There are certain minimum conditions for employment, such as a minimum wage, minimum number of holidays, maximum hours in a week and time without a break. These are enforceable under the law and any unlawful breach can be strictly and heavily enforced.

Written contracts

It is essential that all employees are given written contracts of employment. Not only is it a legal requirement to provide an employee with certain written terms and conditions, it is good practice for your business. A well prepared contract sets out the agreement between the employer and the employee; the obligations owed by the employee to the business and the obligations of the business.

There are minimum requirements as to what is required in a contract. You should also consider adding more detail to cover the precise circumstances of the employment relationship. You should include minimum notice periods and references to policies such as a disciplinary and grievance procedure, confidentiality terms and potentially restrictions on the employee after their employment has terminated. Although each contract is individual to each employee, there are likely to be terms which are generally applicable.

Settling down

It is not unusual to include a probationary period as a term of employment. This is typically 3 to 6 months and should give you sufficient time to assess the suitability of an employee for the role. During this time, the notice period might be significantly reduced. Details of any probation period should be included in the contract of employment. If you are still not satisfied with performance, the probation period can be extended. An employee can be dismissed without reason (on non-discriminatory grounds) for up to 2 years after employment commenced.

Checks and balances

Insurance: you will need employers’ liability insurance as soon as you become an employer. It must cover you for at least £5 million and come from an authorised insurer.

HMRC: Register as an employer with Her Majesty’s Revenue and Customs up to 4 weeks before you pay your new staff.

Pay statements: you must provide staff with pay statements showing deductions you have made for things like tax, National Insurance contributions and student loan repayments.