Hiring employees for your business should be an exciting time. You’ve grown enough to require more staff and you’re no longer responsible for doing absolutely everything yourself. But having employees means dealing with the tricky issue of employment law. This covers dozens of different UK and EU laws and acts in relation to the rights of employees, including discrimination, the national minimum wage, and health and safety – and changes are introduced every year.
Over 75% of calls to our legal advice helpline are related to employment law, so we know this is an area where small businesses struggle. Dealing with employment law issues costs businesses time and money if they grow into a dispute, so it really pays to know your responsibilities before you start to hire people.
Here we look at the four most common employment law issues that we deal with and provide practical advice on how to avoid them.
#1 Issuing employment contracts
All employees, regardless of business size, are entitled to a written statement of employment within two months of their start date. This sets out the main terms and conditions of their employment and is normally sent out with the job offer letter. It should include:
- Name of employee and employer
- Job title
- Main duties
- Place of work
- Start date
- Probationary period
- Pay rate
- Period of contract if the job isn’t permanent
- Number of hours to be worked and working times
- Holiday entitlement
- Pension information
- Required notice periods
- Where information can be found on sick pay and procedures, disciplinary and dismissal procedures and grievance procedures
- Whether a collective agreement applies
There are plenty of templates and guides available to help draft a written statement but, because this is a legally binding document, many small businesses consult an employment law expert for help. These are some of the main issues to consider when you’re drafting it:
- Every employee is entitled to at least 28 days paid holiday a year (including Bank Holidays) and should be paid a week’s pay for each week of leave. There are set rules on how you calculate a week’s pay and our recent blog ‘Holiday pay, a beginner’s guide’ looks at some of the other factors to consider, such as commission and overtime
- Most employees over the age of 25 are entitled to be paid the National Living Wage (currently £7.50/ hour) as a minimum. Different rates apply to those aged under 25 and apprentices. These rates are reviewed annually so you must update their pay rates every year
- If you promote an employee or they change roles, you will need to issue a new contract
Each position you recruit for is unique, so don’t stick to one standard contract. For example, you might increase notice periods and holiday entitlement to attract and retain senior employees.
#2 Managing poor performance
Poor performance is a sensitive subject and can involve having difficult conversations with employees who aren’t performing well. Although managing performance is ultimately dealt with through your disciplinary procedure, sometimes simply having a chat with the employee to see if they need extra help is all that’s needed to get them back on track.
By law you need to have a clear and fair disciplinary procedure in place, which covers issues such as conduct, performance, attendance and health and safety. There is an ACAS Code of Practice on disciplinary and grievance procedures which ensures employers follow a fair procedure. Although this is not law, if an employee pursues a case for unfair dismissal then an employment tribunal will expect you to have followed these steps. Our employers’ guide to disciplinary hearings and appeals looks at the Code of Practice in detail. These are some of the common mistakes we see employers make when addressing poor performance:
- If you do decide to go down the disciplinary route then the starting point should still be trying to improve performance rather than dismissing the employee
- Make sure you follow the process from the start – don’t jump stages if you’ve already tried to address it informally. Provided a proper process is followed and you honestly believe the employee is incompetent to perform the role, then a dismissal will be fair
- Give the employee enough time to improve their performance and set realistic targets
- Investigate reasons for poor performance including issues outside of work which may be affecting them
#3 Dealing with sickness absence
The 2016 CIPD absence survey found the average employee takes 6.3 days off sick each year, mainly for short term absences. As an employer, you need to identify who is off for a genuine reason and who is pushing the limits. As well as the cost to your business there is also the knock-on effect on colleagues’ workloads and morale, so it needs to be dealt with quickly. These are some steps you can take to reduce the likelihood of absence becoming an issue in your workplace:
- Recording absence effectively is the first step to managing it. This helps to identify repeat offenders and absence patterns
- You should have an absence policy which details what people should do if they are ill and what will happen when they return e.g. calling in sick before a certain time and holding return to work interviews. This should be applied consistently to all employees
- Make sure employees know what an unacceptable level of absence is
- If someone goes above the acceptable level of sick leave, you need to raise your concerns and put attendance management measures in place if the situation doesn’t improve e.g. requiring a doctor’s note for every absence
- Read the ACAS guide to managing staff absence
#4 Responsibilities to pregnant employees
The time will come in your business when one of your most valued employees becomes pregnant or wants time off for shared parental leave. This area of employment law is a minefield as many employee rights are protected by law. Employers are prohibited from treating employees unfavourably either because of their pregnancy (or an illness arising from it) or because they are on maternity leave or trying to exercise their right to maternity leave. Compensation for successful discrimination claims is uncapped, so they pose a significant financial and reputational risk to employers. These are some basic steps you can take to make sure you are supporting pregnant employees and new parents:
- Make sure you know what their rights are in relation to maternity leave and pay
- Think about any changes you might need to make to the job of a new or expectant mother, especially for physical roles, such as introducing more rest breaks or minimising manual handling
- Understand how the provisions surrounding shared parental leave and statutory shared parental pay affect you
- Although any employee with 26 weeks’ service has the right to request flexible working, many parents returning to work ask for adjustments to be made to their working hours to fit in with their new lives. As an employer, you need to handle any request in a reasonable manner, but that doesn’t mean you have to agree to it if there is a valid business reason not to do so
How can employers manage these risks?
In this report, we’ve highlighted just a few of the main employment law issues that employers have to deal with. Overall, there are more than 30 pieces of major legislation you have to comply with. Our advice to employers is to invest in legal advice the same way you would accounting advice, so you know your responsibilities and gain a reputation as a good employer.
The legal advice line provided by Abbey Legal as part of our Legal Expenses Insurance policy is an effective risk management tool which prevents employment law issues becoming major headaches for your company. We can help put together contracts for new employees, guide you through the different stages of disciplinary action or advise on any requests you receive for flexible working. Our qualified solicitors and barristers have extensive employment law experience across all industries and are available 365 days a year. Our case studies highlight some of the issues we’ve helped clients with.
You can also sign up to our elXtr blog to stay up to date with employment law changes.