Everything business owners should know about employment law

24 March 2020

For the first-timer and seasoned business owner alike, it pays to stay up-to-speed with employment law. Covering dozens of different laws and acts in relation to the rights of employees, employment law is far-reaching and reasonably complex, which is why it's important to familiarise yourself with what it means to you as a business owner.

If you're pro-active about things, it means staying up-to-date with the latest developments, thinking out your policies and then implementing them with due care. On the flipside, failing to comply with even the most basic employment law principles could be disastrous for you and your business.

We’ve created this helpful document to help keep your policies and practices aligned with employment law.

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How does employment law affect a business?

Employment law is designed to protect the rights of the employee and covers almost every aspect of the employer/employee relationship. Employers must comply with the various rules and regulations if they want to avoid potentially expensive employment tribunal claims.


stressed female worker


Generally, employment law covers the following areas of employment:

  • Contracts and conditions
  • The treatment of employees
  • Employee pay and working hours
  • Sickness absence and time off work
  • Business transfers and takeovers

Within these broad areas, employment law affects more specific areas such as:

  • Discipline and grievances
  • Bullying and harassment
  • Equal pay
  • Maternity/paternity and parental rights
  • Age discrimination
  • Sex and sexual orientation discrimination
  • Race discrimination
  • Disability discrimination
  • Discrimination due to marital or civil partnership status, gender, religion or belief and pregnancy or maternity
  • Redundancy and dismissal
  • Employment tribunals
  • Data protection
  • Terms and conditions of employment


female worker discussing document

Do I need to put a job offer in writing?

If a candidate accepts a job offer, whether the offer is in writing or not, then a contract of employment is created. If you are providing them with a job offer letter, then explain that the contract will be governed by written terms and conditions to be provided later.

However, a contract is conditional on the basis of the candidate's suitability and whether they can provide evidence of this suitability - such as adequate references for example. If the candidate does not meet these conditions and they've haven't yet started work, then the contract does not take effect.

When do I need to provide the above terms and conditions?

A written statement of the terms and conditions should be done within two months of the employment commencing and must cover specified areas such as pay, working hours, holiday entitlement, job title and place of work.

You can include a statement that you reserve the right to amend their job description as well as the employee's place of work, otherwise you'd be in breach of contract if the business was to be relocated.

  1. You can't alter the fundamental terms and conditions without the employee's consent, unless it benefits them. Doing so without notifying the employee can be a breach of contract, or be sued for constructive dismissal.


image of female worker


What are statutory rights?

Some of the most basic elements to consider and adhere to come in the form of statutory rights, which cover a range of responsibilities and directives.

For instance, you must comply with statutory requirements on working hours and leave. Most employees are entitled to work no more than a maximum of 48 hours a week, though employees can voluntarily agree to have the rules disapplied.

The right to a minimum wage, employee wage slips and PAYE for tax and National Insurance contributions are examples of further essential statutory rights that must be adhered to.

What are employee rights?

 These are rights which are implied, rather than explicitly stated, in employee contracts, which cannot be overridden by the contract. These can include:

  • You must not undermine the relationship of 'trust and confidence' with employees
  • You must provide a secure, safe and healthy working environment
  • Employees have the right to belong (or not to belong) to a trade union
  • Employees are entitled to a reasonable degree of privacy
  • Employees are entitled to blow the whistle on any employer's wrongdoings
  • All employees with more than one month's service are entitled to a notice period
  • Most employees are entitled to keep their jobs even if the business changes hands


image of stressed female worker

How does employment law affect discrimination?

It is unlawful to discriminate against an employee on the basis of the following:

  • Race, colour, nationality or ethnic origin
  • Sex
  • Sexual orientation
  • Gender reassignment
  • Age
  • Disability
  • Religion or philosophical belief
  • Marital or civil partnership status
  • Pregnancy, maternity/paternity or parental responsibility

However, you must also avoid indirect discrimination. This occurs if you impose any sort of provision or practice that places people belonging to certain groups at a disadvantage and which cannot be objectively justified. An example of this would be introducing irregular shift patterns that might make it difficult for employees who are carers or have parental responsibilities to tend to.

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Additionally, be prepared to investigate discrimination between your employees in a thorough and impartial manner, too. If the complaint is justified, you may need to update your policies as a result.

How does employment law affect sickness?

You must pay statutory sick pay (SSP) to all employees, including full-time, part-time, agency and casual workers and the length of service is irrelevant. Workers qualify from the fourth day of sickness onwards, for up to 28 weeks, though you can withhold SSP under certain circumstances.


stressed man


Additionally, the fit note has now replaced the sick note; this shows whether an individual is not fit for any work or may be fit for certain types of work.

What kind of disciplinary and grievance procedures do I need?

Your procedures should include who to contact should an employee have a grievance, how to go about contacting them, and what further steps will follow as part of the process - this should be included in the terms and conditions mentioned above.

Make sure employees are aware of which offences merit disciplinary action and apply the rules consistently, and make sure the disciplinary procedure clearly states the grounds for dismissal, good causes for which include:

  • Gross misconduct
  • Being convicted of a criminal offence
  • Unauthorised absence
  • Regular or protracted absence for ill health
  • Incompetence

It's also important to stay aware of unlawful and unfair dismissal. If you make it impossible for an employee to do their job, then they can sue for constructive dismissal as mentioned before, though they must raise a grievance first. Dismissing on the basis of discriminatory reasons is unlawful, if you're sued successfully for this, there is no statutory upper limit on the amount of compensation that can be awarded. The basic award for unfair dismissal can be up to £15,750, though a tribunal also has powers to award compensation for financial loss up to a maximum of £86,444.


image of smiling man on phone


How does employment law affect freelance workers?

For workers who are not classed as employees e.g. freelance and agency workers, the rules and regulations are different. Most workers are still entitled to a number of rights, such as the right to be paid a minimum wage, limits on working time and health and safety regulations.

That said, since freelancers are considered their own boss, they are generally not entitled to the following:

  • A client company’s sick leave, company maternity pays, holiday pay or company pension provisions (some freelancers may be deemed ‘workers’ and so entitled to holiday pay and pension contributions).
  • The legal right to protection under a client company’s internal disciplinary and grievance schemes.
  • The legal right not to be dismissed (It's worth reading the contract of service agreed upon, as this may contain clauses relating to termination of the agreement and time-periods).

It's a good idea to create an employee handbook. Not only is this helpful for new recruits, but it helps to provide a reference point so that disputes and disagreements that occur can be resolved quickly.

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The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.

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