People matters for start-ups – getting it right the first time

5 June 2019 | Applicable law: England and Wales

Your business is taking off, and you are thinking of employing someone. From establishing the fundamentals at the outset, to ensuring a good working relationship and, if things go wrong, parting the ways in an orderly fashion, these essential pointers will stand your business in good stead to ensure a smooth working relationship.

Establish the fundamentals

a. Think status – consider at the outset whether the individual will be engaged as an employee or as a self-employed person. Employment status is important for a number of reasons, including the individual’s tax position and legal rights. Certain important statutory rights (for example, the right not to be unfairly dismissed and the right to maternity leave and pay) apply only to employees.

b. Recruit smart – take a professional approach to recruitment. Cast the net widely (e.g. by advertising) and draw up a job description that sets out the skills and knowledge required for the role. Avoid any statement or implication that suggests you will discriminate (e.g. using phrases like ‘recent graduate’ could discriminate against older people). Obtain at least 2 references, do thorough background checks, check they have the right to work in the UK.

c. Tailor your contract - all relationships with individuals should be documented - and by law, you must send a written statement of terms of employment to employees. The more senior and critical to the organisation an employee is, the stronger the case for paying close attention to the details of the contract (e.g. in relation to post termination restrictions). Remember that the contract is not always king and cannot override certain statutory rules and obligations.

During employment

d. Use a probationary period to manage expectations at the start of the relationship. Make sure the period is long enough for you to judge the employee's performance. 3 to 6 months is usual. Make sure that you monitor performance so that you can make an informed decision about whether to confirm an employee in post.

e. Have up to date policies reflecting current practice - It is better to have short, accessible policies that staff read and engage with than long documents that no-one reads. Ensure that you make it clear that you can amend your policies and they do not form part of the contract. Some policies are critical – for example, equality, health and safety, grievance and discipline (where the basic requirements are set out in a Code of Practice produced by ACAS). Consider others that are tailored to your priorities, e.g. holiday, sickness, social media, e-mail and internet use.

f. Manage issues when they arise, before they escalate. Managers put off difficult conversations when they do not feel equipped to deal with them. Where appropriate, train managers on how to manage and ensure they see it as an important part of their job, not just an inconvenient add-on.

Parting ways

g. Termination of employment is often considered to be the only option where there is a personnel dispute. It may not be – think laterally. For example, mediation may assist to defuse a situation where two employees are at loggerheads. Do not act in the heat of the moment - this could lead to expensive claims and may also invalidate any post-termination restrictions (including confidentiality obligations).

h. Be careful what you record in writing - Ensure all internal notes, emails and other documentation are consistent and carefully worded. Do not be tempted to say one thing to the employee and another in an email to a colleague or family member. This will usually be disclosable to the tribunal or court in a dispute. Speak freely to your solicitor – such communications are privileged and not disclosable. They can help you formulate your aims and how to go about them.

i. Do not assume that because an employee has less than two years' service, you can do as you wish. In general, employees obtain the right not to be unfairly dismissed once they have accrued two years’ service. However, other rights do not depend on length of service. In particular, ensure you act in accordance with the employee’s contract of employment, and take special care when dismissing an employee who may have special protection (for example, pregnant or disabled workers, whistleblowers, or those who have invoked statutory rights such as requesting flexible working). Damages for these claims can be significant.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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