Employment Law for Small Businesses

Posted by

Matt Green

on 02 Nov 2023

Small businesses rarely have the luxury of a legal advisor. We've some tips on how to stay compliant and when to get professional advice.

Employment Law for Small Businesses

In the UK, a comprehensive framework of employment laws governs a wide range of matters, from pay, working conditions, and discrimination to whistleblowing.

It's crucial for small businesses to stay compliant with employment regulations, as failing to do so can lead to legal actions by employees, resulting in financial penalties and damage to your company's reputation.

Additionally, non-compliance could adversely affect your ability to attract and retain new employees.

Key employment laws for small businesses

Small businesses can protect their reputation and foster a workplace culture grounded in trust and professionalism by staying well-informed about relevant laws concerning minimum wage, working time, discrimination, and workplace health and safety.

a. Recruitment

UK employers must comply with the Equality Act when hiring employees. This means that employers cannot discriminate against applicants based on their nationality, religion, sexual orientation, disability, age, or other protected characteristics.

More on Recruitment Compliance

b. Dismissals

UK employers can dismiss employees if it is for a fair reason, such as misconduct, capability/performance issues, redundancy, statutory illegality, or some other substantial reason.

However, when the employer dismisses an employee, employers cannot dismiss employees for a discriminatory reason or for choosing to exercise a statutory right.

More on Unfair Dismissals

c. Wages & hours

Employers in the UK must pay a minimum amount on average for the hours worked, which depends on the individual's age. The UK National Living Wage is paid to those aged 23 or over, and the UK National Minimum Wage is paid to those under 23 or an apprentice.

Working time regulations set out the rules limiting working hours and provide for rest breaks and paid holidays to employees in the UK.

d. Employee benefits

Not all employee benefits are required by law. However, many employers do offer benefits such as health, insurance, life assurance, enhanced pension contributions and share options.

If an employer does offer benefits, they must comply with the contractual requirements governing those benefits.

e. Health & Safety

Employers have a duty of care to employees and to protect their health and safety.

Health & safety obligations include
  • Carrying out a risk assessment and then taking steps to eliminate or control these risks to provide a safe workplace.
  • Providing safety equipment, plant, and machinery.
  • Informing employees about potential hazards associated with their work.

More on Small Business H&S

Employment law tips for small businesses

We have four tips to help you stay on the right side of the law.

By following these guidelines, small businesses can avoid non-compliance's reputational and financial risks.

1. Keep up with changes in employment law & regulations

Employment laws are constantly changing. Small business owners can stay up-to-date on the latest changes by reading industry publications, attending seminars, or consulting with an employment lawyer or HR professional.

2. Ensure staff understand employment policies & procedures

Training employees on their rights and responsibilities under the law is important. This can be done during the induction period, and they should be informed of any changes when they are implemented.

3. Seek professional advice whenever you are unsure

Small business owners should consult with an employment lawyer or HR professional if they have any questions about their employment law obligations. An employment lawyer can help small business owners develop and implement employment policies and procedures that comply with the law.

4. Review your employment policies regularly

Written employment policies and procedures can help small business owners avoid legal disputes by clarifying employee expectations and providing a consistent framework for making employment decisions. These should be reviewed regularly to reflect changes in the law and policy.

Need help with SME compliance?

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