1. CIPD SEMINAR FOR SIG www.bennettslegal.co.ukStaffing issues for smaller businessesSpeaker: Paul Bennett 0844 472 2378 contactus@bennettslegal.co.uk Copyright Bennetts Legal Limited 2011

2. What is a small business? Start up to 50 people; Often owner managed; Often run by family and friends; Focus on what they know; Fall outs and failures come at a high price. Copyright Bennetts Legal Limited 2011 3. Business StructureSole Trader Partnership If they intend to be a sole In a partnership, two ortrader, they are self-more self-employed peopleemployed, with no special work together as partnerslegal structure.and share the profits (or The trader is the business. losses). No legal personalitymeaning the partners areliable for the businessesdebts. Copyright Bennetts Legal Limited 2011 4. Structure Part 2Limited Company Limited Liability Partnership A limited company is a A limited liabilityseparate legal entity, distinctpartnership has some of thefrom its shareholders, advantages (anddirectors and employees. disadvantages) of both a Unlike a sole trader orcompany and a partnership.partnership, it is not the same It has a separate legal entityas the individuals who own orrun it. For example, it is a and therefore can continueseparate legal entity and candespite the resignation orsue or be sued in its owndeath of some members.name. Copyright Bennetts Legal Limited 2011 5. Structure We have seen three recent cases were the wrongstructure is claimed against by employees/formeremployees; Self prepared contacts; Or worse no contracts;The employer wants to get this right itprotects them and manages risk. SMEs are the onlyone who get it wrong. Copyright Bennetts Legal Limited 2011 6. Do they need to be employed?Employees Workers Full time; Consultants; Part Time; Project workers; Employment rights Self employed;accrued. Temporary staff (if youget things right); Copyright Bennetts Legal Limited 2011 7. Keys Tips1. Train the interviewer smaller employers often lack the skills to shortlist and interview;2. Give SMEs a structure (interview forms, key questions, interview, reference requests);3. If you are an independent consultant offer to sit in at second stage interview or to conduct preliminary interviews;4. Recruitment agencies they cost if successful but can be used to reduce no hope applications by SMEs; Copyright Bennetts Legal Limited 2011 8. Key Tips Part 25. Offer letters and statement of terms can be combined (it reduces the paperwork);6. Probationary periods of 6 months are often useful because smaller employers take longer to settle into;7. Review 1 week, 1 month and as appropriate thereafter;8. Think beyond employees; Copyright Bennetts Legal Limited 2011 9. Key Tips Part 39. Register with HMRC as an employer you get free software to help with payroll (or outsource this to your accountant);10. SMEs often fail to deal with grievances, discipline and performance issues the barriers are confidence, knowledge and training all are easy to remedy. Copyright Bennetts Legal Limited 2011 10. Flexible Working Solutions Not all workers need to be employees; Different rights and obligations exist betweenthe two; Employees have far better rights; Employers can make use of these differencesto reduce the cost of employing staff; SMEs often fail to take advantage of thedifferences so tonights aim it to remind youof them and suggest uses for them. Copyright Bennetts Legal Limited 2011 11. Flexible Working SolutionsEmployeesWorkers Written particulars of Not need a statement ofemployment (Section 1 ERAterms;1996 within 8 weeks). Statutory Sick Pay(SSP) No SSP, SMP, SPP, SAPneeds to be paid. Statutory Maternity Pay(SMP), Paternity (SPP),Adoption(SAP) needs to bepaid. Copyright Bennetts Legal Limited 2011 12. Employment Status Overview(continued)EmployeesWorkers Time off for public duties, No such rights.trade union etc; No such protection rights. Notice Pay on termination,written reasons fordismissal, right not to beunfairly dismissed,redundancy payment right(after 2 year qualifyingperiod). Copyright Bennetts Legal Limited 2011 13. Does it matter? It may do to the employee or worker; It affects HMRC Taxation and NationalInsurance position (you can save money andsome workers can to!); Employment Tribunals have to apply the rightsapplicable to the status of the worker. Usingworkers reduces the risks; Copyright Bennetts Legal Limited 2011 14. Full Time In house I see businesses trying to claim all staff are selfemployed; Full Time, part of the furniture workers areemployees both for HMRC and ET purposes.Trying to argue not is foolish and destroyscredibility. Copyright Bennetts Legal Limited 2011 15. Not employed the key question Anyone not working a typical way. I meanwork which does not fit the classic ortraditional concept of an employee workingfull-time for a single employer under acontract of indefinite length; For example:- Casual, Home Workers,Consultants, Self Employed or Multi-Employed. Copyright Bennetts Legal Limited 2011 16. CasualThe flexibility in such arrangements may suit both employerand worker and often takes the form of: One-off tasks or events; Being available on an on-call basis: the employer contactingthe worker when work becomes available, but there being noobligation on the worker to accept the work; Working under a zero hours contract, under which theemployer does not guarantee to provide work and pays onlyfor work actually done can be useful in some sectors (carework, bar, shop staff etc); Copyright Bennetts Legal Limited 2011 17. How to do casual working? Zero hours contracts Zero hours contract thewith individuals;ideal if recruiting direct; Target skill shortages Agency workers and those for whom ittemps ensuringmay appeal i.e.neither the agent orStudents, parents with business have them aschild care issues, older employees (a paper trailworkers, self-employed test. ET/HMRC check ifpeople looking to topsuch arrangement are aup income. sham). Copyright Bennetts Legal Limited 2011 18. Consultants Many self-employed workers are engaged on aconsultancy basis. However, a person who worksin a consultancy or advisory capacity may also bean employee so be clear and sure of status; Whether an individual is self-employed or anemployee will depend on the circumstances andthe application of relevant case law. Get a writtenagreement in place and stick to it include statusclause and Tax and NI indemnity for business; Copyright Bennetts Legal Limited 2011 19. Consultants SMEs can obtain highly skilled individuals fora limited time period per week/month; SMEs can secure specialist skills PR, Sales,Marketing even HR for a modest fee setagainst full time employment; Copyright Bennetts Legal Limited 2011 20. Why consider this? Self Employed No PAYE;Consultants; Payment by results; Experts selling their No tax contribution byskills to the business; employer; Project based work; No NI contribution by Temporary workers employer;being used to bridge No long termgaps; overheads; Payment on invoice Limited costreduced PAYE/payrollcommitments. Copyright Bennetts Legal Limited 2011 21. Why now? Flexibility for both parties; Income from various sources for experts; It bridges the gap between permanent newroles for the recently unemployed; Economic situation causes both sides toconsider new ways of working. Copyright Bennetts Legal Limited 2011 22. SME InsuranceRiskTaxation Is it covered by insurance? Company and individual Key man? Life? Illness? cover? Health insurance? Employee Insurance? Public Liability Insurance? Copyright Bennetts Legal Limited 2011 23. Insurance Businesses (of whatever structure) need toconsider what risks they need to be insuredagainst and they would like to be insuredagainst; As a someone advising small businesses this isa crucial first meeting issue What have theygot? What must they have? What do theyreally need? Copyright Bennetts Legal Limited 2011 24. Public Liability Insurance This covers those in contact with the public foraccidents, mishaps and claims against thebusiness; A slip, trip or accident; Typically all businesses will need this and itcan be purchased cheaply; Details of the insurance should be kept by thebusiness for 40 years (it is a requirement); Applies to SMEs. Copyright Bennetts Legal Limited 2011 25. ExamplesThe Painter andThe Party DJDecorator Held in a hall/pub; People visiting the site Someone falling overhaving an accident;equipment; Injury; Liability may be split Losses from the actionswith others (i.e. Venue);of the painter; Likely that responsible The householder whovenues will requirepurchased the service. service from someone with insurance. Copyright Bennetts Legal Limited 2011 26. Employers Liability Insurance Usually sold with PLI; A requirement of being an employer or havingworkers it needed for both; Covers injury type claims sustained in theworkplace; Covers the actions of your business and yourworkforce against third parties. Copyright Bennetts Legal Limited 2011 27. Professional Indemnity Insurance Covers advice and actions of the business toits clients; Growing importance to small businesses most SMEs require this for example thewebsite designer with defective softwarewould need this type of insurance; Typical costs are a few hundred pounds. Copyright Bennetts Legal Limited 2011 28. Red Tape The Business Barrier 99% of my clients resent red tape and thecosts of compliance when they make their firstappointment; SMEs in particular suffer from a fear factor; Many are relieved when they know the realityand not the perception; Key issues for small business are insurance,health & safety, data protection andemployment law. Copyright Bennetts Legal Limited 2011 29. Health & Safety Its a two way thing; With my clients I offer to The business sets theguide them through thepolicy and manage risk;HSE material in the The Employees must takecontext of their businesscare of themselves and or get a specialisteach other!; consultant to do so; Free resources are madeavailable by the Health &Safety Executive thesecover common risk andindustry. Copyright Bennetts Legal Limited 2011 30. Health & Safety Checklist Part 11. Have you considered the industry and known risks on the HSE website?2. Has the small business considered the issues?3. Is the process documented?4. Are records kept? By whom and where?5. Risk assessments has one been done? Is it up to date; Copyright Bennetts Legal Limited 2011 31. Data Protection Information Commissioners Registrationrequired if the business handles personaldata? Annual registration fee Typically, 35 forSMEs. Copyright Bennetts Legal Limited 2011 32. Employment LawThe starting point with employment law is asalways -Have what you have done documented!1. Offer of Employment Letters;2. Contract or Statement of Terms;3. Have policies in a Staff Handbook;4. Document and take notes at any discussions with staff what was said, when, why, and confirm any agreements/objectives. Copyright Bennetts Legal Limited 2011 33. Employment Law Part 25. Have redundancy and disciplinary criteria documented;6. Get staff to sign, acknowledge and agree handbooks, policies and agreed actions.It is basic but it manages an SMEs risk andSMEs are either very good or very poor at thisso HR Consultants it may need to be you whofollows things up. Copyright Bennetts Legal Limited 2011 34. Employment Law Remember the legislation protects applicantsas well as employees; Workers (including self-employed people)have certain employment rights. Copyright Bennetts Legal Limited 2011 35. Question & Answer Session Copyright Bennetts Legal Limited 2011 36. About Bennetts Legal Boutique Law Firm services includeEmployment Law, HR Support, business adviceincluding consultancy and commercial law; Based in Shrewsbury with clients from all overthe UK; International clients in the financial sector; Our clients include central government; www.bennettslegal.co.uk Copyright Bennetts Legal Limited 2011