Your people are at the heart of your business. There are a number of factors to consider in respect of employees to ensure you are operating within the law.
1. Contracts of employment
1.1 An employee must be given written terms of employment, which can either be a simple printed form or (particularly when restrictions on competing activities, non-solicitation and non-dealing are to be imposed) a detailed legal agreement. Non-EU nationals will require a work permit to be able to work in the UK. For a short form employment contract, you can adapt for your employees, see the Wragge & Co JumpStart Website.
1.2 Part-time and fixed-term employees have a right to be treated no less favourably than full-time or, in the case of the latter, permanent employees.
1.3 After 12 weeks’ service, agency workers have a right to the same basic working and employment conditions as employees recruited directly by the hirer. Employers can choose to “opt out” of this right, but in return, they must pay agency workers for a minimum of four weeks between assignments (if there is no alternative work).
1.4 There is a statutory sick pay scheme by which the employer must provide a minimum level of sick pay for up to 28 weeks. This can often be reclaimed from the State.
1.5 Workers are entitled to a minimum of 5.6 weeks holiday per annum. There is no obligation to give workers’ holiday on bank (public) holidays- although this is often offered by many employers.
2. Unfair dismissal (read more on dismissal here)
2.1 In the UK, after two years’ continuous service (or one year’s continuous service where an employee’s employment commenced before 6 April 2012), employees acquire statutory rights not to be unfairly dismissed (although dismissal and treatment on certain grounds will be unlawful without any qualifying period).
2.2 To defend a claim for unfair dismissal, an employer will have to show that they had a valid reason for dismissing the employee (either conduct, capability, redundancy or some other substantial reason) and that the dismissal was handled in a way that was procedurally fair.
2.3 If an employee succeeds in unfair dismissal claim they may be entitled to compensation. The compensation awarded is made up of two parts: the basic and compensatory awards. The basic award is calculated in relation to a number of factors relevant to the employee; age, length of service and their gross weekly pay. This is capped at £13,500. The compensatory award is intended to compensate the employee for any loss of earnings or benefits. This is subject to a cap of 12 months’ pay for the employee or £74,200, whichever is the lower.
3.1 After two years’ continuous service, employees also acquire rights to compensation if they are made “redundant”. Broadly speaking, a redundancy situation arises where there is (i) a business closure, (ii) a workplace closure or (iii) a need to reduce the workforce. The compensation is calculated in the same way as the unfair dismissal basic award.
4. Family friendly laws
4.1 There are also a number of rights granted to parents and carers of children (such as maternity leave, adoption leave, parental leave and paternity leave).
4.2 All female employees are entitled to 52 weeks’ maternity leave, regardless of how long they have been in the business, and during this period the contract of employment will continue except for those parts relating to pay. For any employees who have 26 weeks’ continuous service, statutory maternity pay must be provided. Much of the cost of this can be recouped from the Government, and it is worth checking the specific regulations on the Government’s website.
4.3 Statutory Paternity Leave and pay of 2 weeks is also available to fathers who have been employed for more than 26 weeks within 56 days of the birth of a child.
5. Working hours and holiday
5.1 Anyone working for you is entitled to work only 48 hours per working week unless they sign something explicitly revoking this protection. Also, all full-time employees are entitled to a minimum of 28 days’ paid holiday per year (which can include the eight public holidays in the UK), with a pro-rated equivalent for part-timers. The amount each employee will be paid for a holiday taken is usually based on the average pay of the 12 week period prior to the holiday starting.
6. National minimum wage
6.1 Any worker over the age of 21 is entitled to £6.19 per hour worked and those aged between 18 and 20 inclusive are entitled to £4.98 (these figures are reviewed each year and from 1 October 2013 the rate for 18-20-year-olds will rise to £5.03 and adult rate will rise to £6.31). Employers are under a duty to keep full records of payment to their employees, and it is important to ensure that you have these right from the start.
7.1 Employees are given protection from discrimination on the grounds of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. Therefore, these factors must not play a part in relation to decisions on pay, promotion, access to training, termination of employment, etc.
7.2 If a Tribunal finds an employee has been discriminated against they can award compensation, which is uncapped.
8. Collective issues
8.1 In contrast to other EU member states, works councils are rare in the UK. At best, employers may have a staff consultation committee or forum, which is usually a fairly low-key conduit for management passing information to the workforce about the business’s performance with some feedback and questions from attendees. Employees are only normally collectively represented through trade union recognition or where the statute requires employee consultation, most notably in relation to collective redundancies and transfers of undertakings. Crucially, no consultative body has the power to block or even delay any actions of the employer, albeit there may be financial penalties to reflect failures to comply with specific statutory requirements.
9.1 Major reforms to workplace pension obligations have been implemented from October 2012. For the first time, all employers will be required to enrol eligible workers into a qualifying pension scheme and pay a minimum level of contributions without any active decision on the part of the worker (although the worker may subsequently elect to opt-out). Auto-enrolment is being introduced in stages from October 2012 with the biggest employers having to auto-enrol first. In the case of companies only just incorporated the auto-enrolment regime will apply from 2017. This means that at some point in the coming years you will be required to put in place appropriate pension arrangements and pay pension contributions for those persons you employ.