Employees are crucial to the success of a tech company; we explain the legal obligations every start up should be aware of.

Taking on employees is an important step in growing a business.  The people you hire early on can make a real impact on your ultimate success and so having the right team in place is key. But what are the legal obligations on recruitment and during employment?  Can you employ that star candidate now, or are they still subject to some restrictions under their previous employment that you should know about? Does an employee need a written contract and what will their holiday entitlement be? Will work permits be required?  Will they be entitled to sick pay, and what other benefits might they expect from an employer like you?  What happens if it doesn't quite work out as you had planned, and you want to let an employee go?

Knowing your rights as an employer and the rights of your employees is vital. This note is intended to provide a brief introduction to employment law issues which apply to employers setting up, or doing business, in England. You should take specific advice whenever an issue arises as employment law provisions do change regularly.

Employment status

Individuals working in the UK may be categorised as self-employed, workers, or employees. 

Hiring self-employed contractors or consultants can seem an attractive option, especially if it means saving or delaying costs such as those involved in setting up an entity or registering for payroll. However it is important to ensure that the relationship is that of a genuine consultancy and that the individual is truly self-employed.

Recently there has been a sharper focus on the distinction between a worker and a self-employed contractor. Worker is a wider term than employee, and includes other individuals who, although not employees, perform work personally for a business other than as a client or customer of that business. Workers have some legal rights, including a right to paid holiday under the Working Time Regulations 1998 (see Chapter 4) and to the National Minimum Wage and to the National Living Wage (see Chapter 5).


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