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New businesses - overview of minimum requirements

Summary:

  • You must adhere to health and safety legislation, even without any employees.
  • Employees and job candidates are entitled not to be discriminated against, or treated unfavourably, because of a "protected characteristic" (race, sex, sexual orientation, gender reassignment, religion or belief, disability, age, pregnancy or maternity, marital status or civil partnership or membership (or not) of a trade union).
  • Even with only one or two employees, there are still strict legal requirements on an employer.
  • Employer's liability insurance is compulsory.
  • A statement of the main terms and conditions of employment must be provided within the first two months of an employee joining you.
  • All employees have the right to an itemised pay slips and to be paid at least the National Minimum Wage.
  • They are also entitled to statutory paid holiday and their hours of work are governed by the Working Time Regulations. Minimum statutory notice periods will also apply, and your employees are also entitled (subject to meeting the qualifying criteria) to Statutory Sick Pay.
  • Once you have five or more employees, you must offer them a designated stakeholder pension unless you have an approved alternative scheme in place. You will also need to have a written health and safety policy.
  • Both male and female workers should receive equal pay for work of equal value, and part-time workers and those on fixed-term contracts are entitled to receive the same pay and benefits (or an overall package which is no less favourable) on a pro-rata basis as comparable full-time staff.
  • Clear documents and policies will help to protect your business and enable you to manage your staff effectively.

Contents

Quick links to the content of this page:

Introduction

More than 200,000 businesses in the UK are new start-ups each year and a staggering 99% of businesses overall in this country employ less than 50 people. Such businesses dread hearing about employment legislation and the amount of red tape it entails and many are unaware of their obligations towards their employees; often they only find out the hard way when they have failed to do something, or have handled a situation wrongly and they are facing a potentially expensive tribunal claim.

Starting from April 2011, businesses with less than 10 employees and start-up businesses will be exempt from new domestic regulations for three years. These measures were announced as part of the Coalition Government's "Growth Review", which aims to encourage business growth. The exemption will not extend to regulation in public safety or national security.

We summarise below the key items all employers need to have in place and need to be aware of. Even more established businesses may find this a useful checklist!

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Health and safety considerations

Even if you have no employees, you need to be aware of the health and safety Paid up members, or Pay as you go. issues which apply to all workers and also visitors to your premises.

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Prior to employing anyone

Your candidates are entitled not to be discriminated against, or treated unfavourably, because of a "protected characteristic" (race Paid up members, or Pay as you go., sex Paid up members, or Pay as you go., sexual orientation Paid up members, or Pay as you go., gender reassignment, religion or belief Paid up members, or Pay as you go., disability Paid up members, or Pay as you go., age Paid up members, or Pay as you go., pregnancy or maternity Paid up members, or Pay as you go., marital status or civil partnership or membership (or not) of a trade union Paid up members, or Pay as you go.. Note the candidate does not have to possess that protected characteristic him/herself.

And take care when recruiting because your candidates will have the right of access to any written personal data kept on file about them and may wish to read what you have said or thought at interview!

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Taking on your first employees

As soon as you take on your first employee, you need the following in place:

  • Employer's Liability Insurance: it is compulsory to hold insurance against injury for the benefit of employees, to display your insurance certificate (or make it available electronically) and keep copies of these certificates for 40 years.
  • A written statement of main terms and conditions of employment: it is a legal requirement that within two months of the start of employment, you provide your employee with a statement Paid up members, or Pay as you go. of the written particulars of the contract of employment including the place of work, rate, frequency and method of pay, holiday entitlement, hours of work, notice periods, disciplinary rules and a number of other terms. This applies irrespective of the number of hours the employee works. The only exceptions are if the employee is contracted for less than one month or works wholly outside GB. (It is good practice to issue this prior to starting work, then any queries can be resolved more easily.)
  • Your employee is entitled to itemised pay slips Paid up members, or Pay as you go. and must receive at least the National Minimum Wage Paid up members, or Pay as you go.. He/she is also entitled to statutory paid holiday Paid up members, or Pay as you go. and his/her hours of work are governed by the Working Time Regulations Paid up members, or Pay as you go. which regulate breaks, length of the working day and week, and impose an average limit on the number of hours per week, unless the employee agrees to opt out of the latter. Minimum statutory notice periods Paid up members, or Pay as you go. will also apply, and your employee is entitled to take (unpaid) time off to care for dependants Paid up members, or Pay as you go. if a problem arises and also (subject to other qualifying criteria including earning more than the Lower Earnings Limit) to Statutory Sick Pay Paid up members, or Pay as you go.. Once you have five or more employees, you must offer them a designated stakeholder pension Paid up members, or Pay as you go. unless you have an approved alternative scheme in place.
  • The same rights not to be discriminated against (as set out above for candidates) apply to workers. Both male and female workers should receive equal pay Paid up members, or Pay as you go. for work of equal value, and part-time workers Paid up members, or Pay as you go. are entitled to what a full-time person would earn, on a pro rata basis. Those on fixed-term contracts Paid up members, or Pay as you go. are also entitled to receive the same benefits (or an overall package which is no less favourable) on a pro-rata basis as comparable full-time staff.
  • If your employee works nights Paid up members, or Pay as you go., he/she is entitled to a free health assessment and if a young worker Paid up members, or Pay as you go., the rules on breaks and working hours are different.
  • Immediately on starting work for you, your employee is entitled not to be dismissed for asserting a statutory right, for bringing a health and safety complaint, for whistle blowing Paid up members, or Pay as you go. (subject to following the precise rules set out in the legislation), and, if appropriate, to take maternity leave Paid up members, or Pay as you go.. The employee should receive pay during suspension on medical grounds and may take time off for public duties Paid up members, or Pay as you go., for duties as an officially recognised trade union Paid up members, or Pay as you go. officer or to perform the duties of a safety representative.

Once working for you on the terms and conditions you have agreed, you cannot easily change these without your employee's agreement so care is needed in drawing up clear documents and policies which protect your business and with rules and procedures which enable you to manage your staff effectively.

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Minimum statutory rates

Up to date rates for statutory sick pay, maternity and adoption pay, parental leave, minimum wage, redundancy pay etc are all outlined on our key statistics page.

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Communications and consultation

The sensible employer will decide early the preferred methods of consulting Paid up members, or Pay as you go. with his/her employees and will put proper mechanisms in place for consultation and communication. Without these, the employees may decide they wish to have union representation Paid up members, or Pay as you go. and employers with 21 or more workers must recognise and negotiate with trade unions where a sufficient proportion of the workforce vote in favour of this.

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Policies and procedures

Whilst at an early stage you may feel that you do not need a whole raft of procedures and policies, we would strongly recommend that you have the following as a minimum:

  • bullying and harassment Paid up members, or Pay as you go. policy
  • disciplinary Paid up members, or Pay as you go. procedure
  • equal opportunity Paid up members, or Pay as you go. policy
  • grievance Paid up members, or Pay as you go. procedure
  • IT Paid up members, or Pay as you go. policy
  • and, if you have five employees, it is a legal requirement that you have an up to date health and safety Paid up members, or Pay as you go. policy.

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Other minimum requirements

You may wish to read our page on employment rights and on minimum health and safety Paid up members, or Pay as you go. requirements.

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