Basic Employment Rules Every Employer Should Know

Rules of engagement. Employment law is a complex area that can be full of pitfalls. It covers everything from Recruitment & Hours, leave and pay, to Employee Rights & Discrimination.

As an employer (and even as an employee) you should be aware of, and keep up to date with changes of, the main elements of employment law likely to affect you. Whenever necessary, take professional advice.

Some Employment Legislation to be Aware of

The above list is NOT exhaustive! But as you can see it is a LOT to take on board so we’ll try and demystify them as much as we can. However, we do ask that you realise that Employment law is complex and changing rapidly. This article reflects our understanding of the basic legal position as known at the last update. You should obtain advice on your own specific circumstances and check whether any relevant rules have changed before taking any action based on the content of this post.

So if you’re ready, we’ll dive in …

First up … which rules apply to you?

To decide which rules, regulations and laws apply, you need to ascertain your employee’s “employment status” – ie are they

In employment law a person’s employment status helps determine:

  • their rights
  • their employer’s responsibilities

If you’re unsure, have a look at the government’s website: https://www.gov.uk/employment-status

The following applies mainly to employees but could be applicable to other employment statuses .

Rules Regarding Recruitment & Contracts

Employers can not allow prejudice (conscious or unconsciously) to affect your decisions when it comes to recruiting someone for an available position. You should only focus only on the requirements of the job and ensure you maintain records, so you can explain why you chose one candidate over another, as applicants can request to see any interview notes.

All employees have an employment contract with their employer. A contract is an agreement that sets out an employee’s:

  • employment conditions
  • rights
  • responsibilities
  • duties

These are called the ‘terms’ of the contract.

Employees and employers must stick to a contract until it ends (for example, by an employer or employee giving notice or an employee being dismissed) or until the terms are changed (usually by agreement between the employee and employer). [source: Gov.uk]

Whether in writing or not, a contract of employment exists as soon as a candidate accepts your offer of a job. So you should make it clear at any interview that you are not offering a job at that stage and in any job-offer letter, explain that the contract will be governed by written terms and conditions to be provided later.

A contract can be conditional on the potential employee providing evidence of suitability for the position- such as adequate references or proof of qualifications. If the condition is not met and the employee has not yet started work, the contract does not take effect.

Notes about employment contracts:

  • You must provide a written statement of terms and conditions
  • You must provide this to employees and workers on or before the first day of work.
  • It must cover specified areas including pay, working hours, holiday entitlement, job title (or job description) and place of work.
  • Include a statement that you reserve the right to amend the job description.
  • Reserve the right to change your employee’s place of work. (Otherwise, you would be in breach of contract if the business was relocated.)
  • You cannot change the terms of the contract without agreement

Rules Regarding Employee Rights

Employees have rights which are implied (but not explicit) in their contracts. These rights cannot be overridden by a contract

  • You must provide a healthy, safe and secure 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 (regarding monitoring of phone calls, emails or internet)
  • Employees are entitled to blow the whistle on their employer’s wrongdoings(they can sue for full compensation for any losses incurred if they are sacked or demoted as a result of this)
  • All employees with more than one month’s service are entitled to a notice period
    • The statutory minimum is one week (after one month’s service), rising to two weeks after two years, with a maximum of 12 weeks after 12 years.
  • Most employees are entitled to keep their jobs even if the business changes hands
    • When a business is transferred to a new owner, all employee rights usually remain. In most cases, sackings would constitute unfair dismissal.

Rules Regarding Discrimination

You must not treat someone less favourably (either directly or indirectly) because of their:

  • race, colour, nationality or ethnic origin;
  • sex;
  • sexual orientation;
  • gender reassignment;
  • age;
  • disability;
  • religion or philosophical belief;
  • marital or civil partnership status;
  • pregnancy, maternity or parental responsibility.

Under Employment Law, employers must make ‘reasonable adjustments’ to enable people with disabilities to work by removing physical and non-physical barriers. (In some circumstances, you may justifiably be not be make adjustments.eg it would be ineffective, not practicable, or in breach of health and safety regulations but you must be able to prove this

  • Employers can no longer compulsorily retire employees on the basis of age

Rules Regarding Pay & Leave

  • Most employees are entitled to work no more than a maximum 48-hour average working week. An employee can voluntarily agree to work more than this but any agreement must be in writing and signed by the worker.
  • Employers may consult on and agree a system of annualised hours wherein the total number of hours worked do not exceed an average of 48 hours per week over a period of one year.
  • Time spent travelling to the first and last client of the day now counts as working time for workers with no fixed place of work (such has health care workers).
  • There are detailed regulations on minimum rest periods.
  • Employees are entitled to a minimum of 5.6 weeks’ paid leave a year.
  • Employees can be entitled to maternity, paternity, shared parental or adoption leave, and unpaid parental leave or leave for family reasons. (see Regulations on Working Parents below)
  • Employees with at least 26-weeks’ service have the right to make a request for flexible working.
  • Part-time workers must be treated no less favourably than full-timers. eg, part-timers are entitled to holiday on a pro rata basis.

Minimum Wage

  • Employees have the right to a minimum wage
    • Employees aged 23 and over must be paid the National Living Wage of £9.50 an hour (from April 2022).
    • Apprentices under the age of 19, or older than this but in the first year of their apprenticeship, must be paid at least £4.81 per hour.
    • Service charges, tips, gratuities and cover charges paid to a worker through payroll do not count towards NMW.
  • You must operate PAYE for tax and National Insurance (NI) contributions
    • Deduct employees’ tax and NI contributions from their wages.
    • You also need to account for employer’s NI contributions.
    • Details need to be reported to HM Revenue & Customs, and you must pay them any tax and NI contributions you owe.
  • You must give every ‘worker’ and employee a wage slip
    • This must show total gross pay, deductions and net pay. Where pay varies according to the number of hours worked, it must also include the number of hours worked.
    • Deductions (eg tax, NI, pension contributions and union subscriptions) must be itemised.
    • Apart from tax and NI, deductions can only be made with the employee’s agreement or to correct previous overpayments.

Rules Regarding Working Parents

  • Employers must allow mothers-to-be paid time off for ante-natal care, regardless of length of service.
    • Fathers, partners and intended parents (in surrogacy arrangements) are entitled to take unpaid time off work to attend up to two ante-natal appointments.
  • Give statutory maternity leave to new mothers
    • Every new mother is entitled to 26 weeks’ ordinary maternity leave and 26 weeks of additional maternity leave, during which all her contractual rights (except pay) continue.
    • You must inform her of the date when she is due to return to work but she can come back earlier, if the employer has been given 28 days’ notice.
    • It is illegal to allow a woman to return to work within two weeks of childbirth or within four weeks of the birth if the work is in a factory
    • Every mother has the right to return to work up to one year after having the baby. Special exemptions apply if you have five employees or fewer and it is not reasonably practicable to offer suitable re-employment.
    • A mother has the right to claim automatic unfair dismissal and sex discrimination if she is dismissed for any reason to do with the pregnancy or childbirth. If she is dismissed, you must give written reasons without having to be asked.

New Mothers

  • New mothers may qualify for statutory maternity pay (SMP)
    • A mother who has completed 26 weeks’ service by the end of the 15th week before the expected week of childbirth (EWC) will usually qualify.
    • Statutory maternity pay is paid at 90% of average weekly earnings for the first six weeks. It then goes down to a fixed rate of £156.66 per week (2022/23) or 90% of average earnings if lower for up to 33 more weeks.

New Fathers

  • New fathers may qualify for up to two weeks’ paid paternity leave
    • Eligibility criteria and the amount of statutory paternity pay are the same as for SMP.
    • Leave must end within 56 days of the birth.
  • A mother can share her statutory maternity leave and pay with her partner
    • If she returns to work early, the remainder of her entitlement can be shared with her partner as shared parental leave (and shared parental pay). Each partner can take up to three blocks of leave.
    • To qualify, an employee must have 26 weeks’ service and remain with their employer until the end of their leave.
    • The employee must also share responsibility for the child with their spouse, civil partner, partner (if they live with the child) or the child’s other parent.

Adoptions, Bereavement & Parental Leave

  • Equivalent leave and pay entitlements apply for adoptions
  • All employed parents have a legal right to parental bereavement leave
    • Parents have the right to two weeks’ leave if they lose a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy. Leave is paid for eligible parents.
  • Parents can request unpaid leave to look after their children
    • An employee with at least one year’s service is entitled to up to a total of 18 weeks’ leave per child. The maximum in any one year is 4 weeks (unless you agree to more).
    • They retain all their employment rights during their time off (other than remuneration).
  • Consider flexible working requests
    • Employers must consider requests to work flexibly from any employee with at least 26 weeks’ service.
    • Requests must be made in writing. Each employee can only make one request in any 12-month period.
    • Flexible working includes provisions such as annualised hours, flexitime, job-sharing, shift-working, term-time working and homeworking.

Rules Regarding Disciplinary and Grievance Issues

  • Make sure you have disciplinary and grievance procedures in place
  • Your procedures should include who the employee with a discipline or grievance issue should contact, how to go about it and what further steps will follow as part of the process.
  • Employers must follow ‘fair and reasonable’ procedures when dealing with discipline and grievance issues. [Follow the Acas Code of Practice.]
  • Include basic disciplinary and grievance information in your written terms and conditions.
  • Make sure employees know what offences merit disciplinary action, and apply the rules consistently.
  • Make sure the disciplinary procedure clearly states the grounds for which employees can be dismissed. These include gross misconduct, being convicted of a criminal offence, unauthorised absence and, in certain circumstances, regular or protracted absence for ill health.
  • Make sure you have a good reason if you dismiss someone
    • Good causes might include:
      • Persistent or gross misconduct, incompetence, lack of qualifications or a legal bar on that employee doing that job.
      • Inability to do the job because of frequent or prolonged absences due to sickness or injury.
  • Redundancy might also be grounds for dismissal
    • The reason must be genuine. In general, the job must have disappeared.
    • Employees must be selected for redundancy on a fair and objective basis, after reasonable consultation, with adequate notice and a fair appeals procedure.

Lawful and unfair dismissal

  • An employee can claim unfair dismissal if he or she has been dismissed for an ‘unfair’ reason, or if unfair procedures are followed. In general, they must have two years’ service. But in some circumstances, length of service is immaterial.
  • If you breach a fundamental term of the employment contract or make it impossible for employees to do their job, they can sue for ‘constructive’ (unfair) dismissal. They must raise a grievance first.
  • It is unlawful to dismiss anyone for discriminatory reasons. There is no statutory upper limit on the amount of compensation that can be awarded in such cases.
  • The basic award for unfair dismissal can be up to £17,130. But a tribunal also has powers to award compensation for financial loss up to a maximum of £93,878.

Phew – we think that’s it for now! But as we said earlier employment law is very complex and changes rapidly. The above information reflects our understanding of the basic legal position at this current time and you should obtain legal advice on your own specific circumstances and check whether any relevant rules have changed before acting on the information given above.

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