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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 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 , 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 .
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
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
and must receive
at least the National Minimum Wage . He/she is also entitled to
statutory paid holiday and his/her hours of work are governed by
the Working Time Regulations 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 will also apply, and your employee is entitled to take
(unpaid) time off to care for dependants if a problem arises and also
(subject to other qualifying criteria including earning more than the
Lower Earnings Limit) 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.
- 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
for work of equal value, and
part-time workers are entitled to what a full-time person would earn,
on a pro rata basis. Those on fixed-term contracts 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
, he/she is entitled to a free
health assessment and if a young worker , 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
(subject to following the precise rules set out
in the legislation), and, if appropriate, to take maternity leave .
The employee should receive pay during suspension on medical grounds and may
take time off for public duties , for duties as an officially recognised
trade union 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 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 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
policy
- disciplinary
procedure
- equal opportunity
policy
- grievance
procedure
- IT
policy
- and, if you have five employees, it is a legal requirement that you have an
up to date health and safety
policy.
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Other minimum requirements
You may wish to read our page on employment rights and on
minimum health and safety requirements.
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