Articles | Employment law and small businesses

A quick guide to some of the employment law considerations when starting up or growing your own business.


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When you will need to take on staff.

Investing in people is a positive step towards growth and you will want to ensure that the people you appoint, train and develop will become valuable assets to your business.  Taking the time to consider the employment law implications before you make this investment will help you avoid potential pitfalls and maximise your return.  Some of the points to consider are:

Why are you taking on staff?

Do you need to service a new contract?  Are you anticipating seasonal demand for a particular product or service?  Do you require holiday cover?  The answers to these questions will affect what type of worker you require.

Types of worker

A permanent employee is employed under an open-ended contract of employment which can be ended by either party serving notice.  They may be full-time or part-time.

A fixed-term employee has a contract of employment which will terminate after a specified length of time or once a specified project has been completed.

Temporary staff may be supplied by a job agency but you will still owe some legal obligations to the worker.


The recruitment process itself can expose you to some legal risk but there is also a wider value in getting the process right so the employment relationship starts on the right foot.

Some things to consider are: how will you draft your advertisement?  Where will you advertise?  Do you intend to recruit foreign workers?  What questions do you ask on your application form?  Who will interview the candidates?  How will you decide who is successful?  What allowances will you make for disabled applicants?

Practical steps to take

If you become an employer there are steps you have to take to ensure you are legally compliant.  Some of the following only apply after you have employed someone for a specified period of time. This list is not exhaustive and if in doubt always seek our professional advice.

  • Provide the employee with a statement of their terms and conditions of their contract of employment
  • Register with HMRC as an employer and set up a payroll system.
  • Ensure an itemised pay slip is provided on or before payment is made.
  • Check you are paying the applicable National Minimum Wage which varies according to the employee's age.
  • Calculate the annual leave entitlement for each employee and ensure that their hours of work provide for the minimum rest breaks permitted by law.
  • Notify the Information Commissioner that you will be processing personal information for employment related purposes.
  • Put together and distribute a disciplinary and grievance procedure.

There are other steps you can take which will help to prevent disputes arising in the workplace and get the most out of your employees:

  • Put together a staff handbook containing your policies and procedures, for example family friendly policies and an equal opportunties policy.
  • Ensure each employee has access to the handbook and remember to update it as your business grows.
  • Provide each employee with a written contract of employment which provides more detail than the terms and conditions of employment, for example restrictions against them joining a competitor.
  • Hold an annual appraisal to record an individual's progress.
  • Arrange equal opportunities and management training for managers and ideally all staff.

As more employment related legislation is enacted there are more potential pitfalls for employers.  However, as the saying goes, prevention is better than cure, and taking some time to plan for your employment law obligations when you begin hiring staff will help protect your business in the long term.