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Posts for February 2010
Small Businesses and HR: In the beginning…
February 24, 2010
As a start-up, hiring the first employee is a big step. Many regulations and laws affect the hiring, firing, and work of employees. If you employ other people you have to meet the requirements of employment law, and be responsible for paying wages, tax, National Insurance Contributions and Working Tax Credits where relevant. Having recently set up a small business myself, I have had to consider the commotion that goes hand in hand with employing new people. In the current economic climate jobs have become a rare commodity, making it easier for employers to find good people to take on. Recruiting was the easiest part for me. There were plenty of people who wanted the positions that I had free; the most difficult factor was selecting the best ones. Once I chose the right people, I was then responsible for putting employment contracts in place. The Employment Rights Act 1996 stipulates exactly what must be covered, which include the obvious, such as; the name of the employer and employee, the date the employment began, rate and frequency of pay, hours of work, holiday entitlement, job title, and a description of the duties, as well as other details. Legal advice is often recommended because employment legislation changes frequently, which can have an impact on the information that must appear in the statement – I talked to a lawyer. Once the employment contract has been sorted, and work commences, you get to the part where you then need to pay your employees – argh! It got tricky for me here; some of my employees had other jobs, but as they were students they were still under the personal allowance band, so it was important to use the correct tax code. For this I, again, decided to consult an expert, because the last thing you want is HM Revenue & Customs chasing you, or your employees. On top of contracts and salaries, as a small business you also need to keep employment records of individuals and collective data, as well as certifying that employees work legal hours, and take breaks in line with the law. As times goes on more HR issues can crop up which employers need to tackle without delay; common issues include maternity and paternity rights, discrimination in the workplace, or health and safety concerns. Staying up to date with the law is essential, and as a small employer it is important to protect yourself by doing so. Charlotte Blake of Spanish Translations UK.
Intellectual property can seriously injure your wealth
February 17, 2010
This week’s blog comes from IP barrister Jane Lambert. Offering a very personal view of how small businesses can approach their IP, she points out that getting legal protection for your invention is no magic shield - many innovators learn that the expensive way. While IP is growing in popularity as a building block for contracts, partnerships and licences, the cost of defensive IP - including court action - is, as Jane explains, high, and she gives her own take on what action - legal or not - aspiring entrepreneurs should look at for their new invention.
Jane Lambert Barrister NIPC
In over 30 years at the English Bar I have seen far more businesses fail because they had too much intellectual property rather than too little. That may sound counter-intuitive and almost mocking – especially if you have just settled your patent agent’s bill. So here are the facts behind such a surprising statement:
Intellectual property can be expensive. In 2005, European Patent Office research showed the average cost of getting a typical 14-page patent for six countries and renewing it for ten years cost inventors €30,530. Even if your patent sees the light of day that’s a lot of money - but the sad reality is that most are never commercialised. Of the few that are, only a tiny percentage cover their costs and even fewer make serious money. Secondly, patents, copyrights, trade marks and other forms of intellectual property are essentially mechanisms which are used to bring a lawsuit.
Save for commercial bootlegging, counterfeiting and piracy, it is not a crime to infringe somebody’s intellectual property rights in the United Kingdom. Litigation can be very expensive. In 2003 IPAC (a government IP committee) reported that a patent infringement claim averaged £1 million in the High Court and between £150,000 and £250,000 in the Patents County Court. Legal Aid isn’t available. The only way that most small businesses can fund IP litigation is to take out IP indemnity insurance; the premium for reliable cover for the UK works out at around £4,000.
Thirdly, the IP protection chosen may not be the most suitable for the business. A patent, for example, may be unnecessary for products with a short shelf life. Unregistered design right which prohibits making articles to original designs and comes into being automatically as soon as the design is recorded in a drawing. A CAD file or other document or simply keeping the invention under wraps and relying on confidentiality may be all that a business needs in many instances. The advice that I have given my clients for many years is to consider where they want their business to be in a period of their own choice. It could be six months, six years, or indeed longer - or shorter.
Next, I ask them to identify their likely income streams over that period. After that I tell them to imagine the competitive threats to those income streams. I then get them to devise counter-measures to those threats. Nearly always those counter-measures are commercial such as lowering prices or developing new products or services.
In only a tiny minority of cases does a client suggest some kind of legal protection (i.e. intellectual property) and in many cases that protection is one that arises automatically. For those very few cases I always counsel the client to provide funding for enforcement either through insurance or otherwise.
Jane Lambert of NIPC.
Can you make staff take snow days as holiday?
February 10, 2010
There have been a lot of misleading headlines about holiday and absence. Here are some useful facts.
As the freeze continues, many employers have been asking snow-bound staff to take a day’s holiday if they don’t show up for work. But as well as battling with staff absence and the awful weather, bosses have been surrounded by a blizzard of headlines about holiday and absence, many of which are misleading.
Use this checklist to deal with any problems fairly and in line with the law:
- An employer cannot make someone go to work.
- Employees have no general legal entitlement to be paid for days not worked. Many contracts/staff handbooks specifically say employees won’t be paid for absence except under their sickness, holiday or parental leave schemes.
- Employers who keep the workplace open may ask absent employees to chose to take holiday if they want to be paid (as opposed to unpaid leave).
- Employers can specify in advance that annual leave must be taken on days they chose. To do this they must specify dates in advance and give relevant notice “twice as many days in advance (of the first day of leave) as the number of days to be taken”. So even one day’s leave requires two full days’ notice. This does not usually cover shutdowns needed at short notice.
- Some employers have their own rules for specifying leave dates that may override the basic rules above.
- Parents taking time off to look after their children have no general right to be paid.
- Some employers offer staff the chance of working additional hours to catch up on a backlog and to help employees catch up on pay.
- Many employers are paying people who attended work on the basis of a full day even if they arrived late or went early (though not all are obliged to do so).
- The legal maximum for a working week - 48 hours - is set as an average, not an absolute ceiling, so workers can work longer hours occasionally to get things back to normal.
Annabel Kaye of Irenicon Ltd.
Green is not my colour
February 04, 2010
As I was browsing for a new console this week, the shop assistant came up to me and asked if I was planning to make my purchase “eco-conscious”. “I just want to play games on it!” was my response.
As a consumer, am I all that bothered about the carbon footprint of my PS3? I’m far too busy deciding whether to buy FIFA 10 or PES. (Think I’m going with the latter). But it got me thinking about how small businesses manage the current drive to be ‘green’. With daily to-do-lists stretching longer than your average motorway tailback, do owner-managers really have time to commit to the environment, especially when customers need serving and cashflow looking after?
I’m not against going green – who could be, really. Many companies see an upside from being environmentally friendly, and we all benefit from a spot of simple recycling. Increasing environmental regulation, however, adds yet more pressure to small firms who are already overrun with red tape. Is there a better way to help small businesses achieve environmental harmony without burdening them with yet more legislation?
The Law Donut has some excellent (and simple) advice on how your business can meet environmental obligations.
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