Managers’ common mistakes: which one could land you in court?

By: Annabel Kaye

Date: 5 November 2009

Most new business owners are too busy to read a lot of legal jargon or 'business best-practice', and as a result, can make some, er, interesting decisions about hiring and firing staff. We see all kinds of queries and misconceptions on our Irenicon hotline.

Here are answers to some of the most common managers' questions:

1. "Surely small businesses are exempt from employment legislation?"

Sorry, no. There were limited exemptions for small businesses, but they have slowly been taken away, and nowadays small businesses are no more exempt from employment law than from any other law.

2. "If I don't have any staff I can't have any employment law problems - can I?"

'Fraid so. The minute you pay someone to do some work for you, whether or not you view them as an employee, you can find yourself with financial and legal obligations. For instance, under PAYE, even self-employed contractors with their own limited companies can turn out to be your responsibility when it comes to tax pay – you could find the taxman coming to you for their tax and National Insurance. Check the specifics of your firm's arrangements with HMRC's free employer's helpline on 08452 6070143. See points 3 and 4 too.

3. "How can I have responsibilities to people I've never hired?"

All workers have rights. Even people whom you have never taken on as employees. Whoever takes on a job for you automatically gets: protected from discrimination, entitled to the minimum wage, allowed companions at disciplinary/grievance meetings, and covered by working time regulations (holiday and hours worked in a week), as well as health and safety law. Just for starters. Get free advice from ACAS on 08457 47 47 47.

4. "Can it be true that someone else's employees can be my legal problem?"

Yes. Not only do they have potential rights against you as workers (see above), but they can become your employees (or a drain on your cheque book) even if you have never met them - if you find yourself tangled up in the Transfer of Undertakings Regulations when you change your service provider. The rules on transfers (known as TUPE regulations) are complex and can seem irrational to the uninitiated. They also affect you and your staff if you lose a contract yourself. If you are buying services (even cleaners) or selling services you should take advice before you enter into or terminate a contract to avoid expensive mistakes. Again, call ACAS on 08457 47 47 47.

5. "Don't my people have to work for a certain time to have rights?"

Not usually. Employees' contractual rights begin the minute you offer them a job. The law specifically prohibits discrimination against part-timers, and the days of lengthy qualification periods are long gone. Many new, "expensive" rights such as discrimination start before an interview. Contractual rights begin when you make an offer, and ordinary unfair dismissal rights begin at one year's qualifying service (which may be earlier than you think if you had a Saturday worker, or contract worker whose pre-employee work with you service will probably count towards their first year.

6. Surely if I am trying to do the right thing and I am fair I can't get into trouble?

Employment law is increasingly concerned with how things are done. It ain't what you do so much as the way that you do it. When it comes to discipline, dismissal, redundancy and many other areas, it is vital to adopt the right method or you can find yourself facing an unfair dismissal. There is no exemption for small employers and no "get out of jail free card" for new businesses. Even if you have never heard of a particular law, it applies to you.

7. "All these workers' rights' are very depressing - what is the point of having workers and staff?"

The point of employees is to increase your profitability. Many bosses spend more time choosing their company car than they do recruiting and contracting their staff. If you don't chose the right people and contract them in the right way, you are more likely to run into trouble - just like picking a Porsche with your eyes shut. You can manage and improve performance in people and contract sensibly for what you need - but it is far easier to do this at the beginning before you run into trouble.

8. "Staff can just do what they want these days anyway - it's not fair."

Once you're produced contracts and handbooks, communication is the key to performance management. Many employers ring our hotline when they are disappointed with their staff and convinced that an employee is being deliberately unhelpful. This is sometimes the case, but as often as not, there is a problem with communication. Wherever possible, try to be clear and consistent about what you want from a worker. A large part of a contract of employment is 'custom and practice'. Employers who tolerate bad performance over time can find it extremely difficult to raise standards again - it can be done, but it is so much easier to keep things right in the first place.

Annabel Kaye is managing director of Irenicon Ltd, a specialist employment law consultancy.

Tel: 08452 303050

Fax: 08452 303060 Website: www.irenicon.co.uk.

You can follow Annabel on twitter – http://twitter.com/AnnabelKaye

Irenicon offer 20 mins free advice to new callers.

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