Hiring Right: Employment Law Essentials Every Startup Founder Should Know

In this article, we're giving you a heads-up on the employment law essentials every startup founder should know.

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January 19 2024 - When launching a startup, a great idea and some killer contacts are only the beginning. As with any business, there are many legal factors to consider - and every year, many new businesses seek the services of expert employment solicitors when things go wrong.

In this article, we're headhunting the employment law essentials for hiring right that every startup founder should know for 2024.

Why is Employment Law Important for Start-Ups?

In the UK, the Employment Rights Act 1996 is the blueprint for the rights owed to employees and the obligations of employers. The Act covers a number of employee obligations including health & safety, equal rights, pensions and matters concerning pay - and are legal requirements even if you employ just one member of staff.

Falling foul of employment law in the UK can carry some serious consequences including penalty fines, loss of business, potential lawsuits and loss of reputation.

Employment Law Essentials for Startup Founders

A startup founder or owner should familiarise themselves with all aspects of employment law. However, some are of paramount importance and we're going to take a look at some of these in this section:

Health and Safety

It is the responsibility of the owner of a business to ensure that employees have a safe environment to work in, both in terms of personal safety (ensuring that the workplace is hazard-free, equipment is maintained and that employees have all the necessary PPE) and health (ensuring that factors such as temperature, pollution and equipment are not likely to cause damage to health).

While this applies to all businesses, it's particularly important where employees are working at height, operating heavy machinery or working with hazardous materials such as gases.

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Equality and Discrimination

Under UK employment law, it is illegal to discriminate against somebody when hiring, promoting or distributing tasks and such discrimination includes:

• Age discrimination
• Racial discrimination
• Gender discrimination
• Discrimination against disabled persons - to include physical and mental health conditions

If a business is found to have discriminated against an employee or candidate in any way it can have some serious ramifications including possible legal action and negative publicity.

Working Hours and Time Off

When you only have a small staff it can be tempting to expect employees to work longer hours and take fewer breaks but, when it comes to UK law, the computer says no. Legally, you are obliged to allow employees breaks during their working day, a minimum of 5.6 weeks paid leave each year and parental leave.

The law also states that you cannot demand that staff work for more than 48 hours per week. As well as safeguarding employee wellbeing, this law also works to improve productivity for the business as healthy staff are more engaged and productive.

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Pay and Pensions

The employment law in the UK includes a minimum hourly wage scale as follows:

• Apprentice - £6.40
• 16-17 year old - £6.40
• 18-20 year old - £8.60
• 21+ year old - £11.44

This means that it is illegal to pay your employees less than these rates - a breach which may cost you a hefty fine or a court case.

You must also - even if you employ just one person - offer a company pension scheme into which the business, as well as the employee, must make contributions. This has been UK law since 2022 and you must abide by this unless the employee earns less than:

• £520 a month
• £120 a week
• £480 over 4 weeks

Right to Work

The UK is an extremely popular destination for overseas workers and these employees can add a new dimension of skill and expertise to your business, as well as language capabilities.

While this is very much the case, it is your responsibility to ensure that anybody that you employ has the right to work in the United Kingdom - including checking their documents such as visas.

Failure to do this can result in the employee being removed from your business and the company - and you as an individual - being fined or even imprisoned for this serious offence.

Dismissal

If an employee has breached company rules or is simply not working out, it's natural to want to get rid as soon as possible, however, it's rarely that simple.

UK employment laws on dismissal are designed to prevent employers simply firing staff on a whim and employers must therefore follow a set process of verbal and written warnings before dismissal.

There are, of course, some exceptions to these rules. For example, in the case of gross misconduct, an employee can be dismissed with immediate effect.

It's extremely important to present new employees with a contract which details company policy regarding dismissal, including those actions which may be considered a gross misconduct, to avoid finding yourself in a costly unfair dismissal trial.

Partnering up with employment law...

In the modern world, it's important for the future of any company to comply with employment law. Not just for the sakes of employees but to show what values your company stands by. Employment law should always be treated as a priority if you want to not only avoid expensive legal action but, also, if you want to attract and retain quality employees.

Blending employment law with your company policies and employee contracts is a great way of making sure that these are an integral part of your business and thereby much less likely to be neglected.

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