Hiring your first employees is a very exciting but daunting step to take when you are growing your business. It is essential to remember that an employees are not just the most expensive annual expense that most small businesses have but they are also human beings with emotions and importantly employment rights.
As a UK employee they are given their basic employment rights primarily under the Employment Rights Act 1996 and within this article we will look into the criteria that your employees must meet to be eligible for the Employment Rights Act 1996 and how these can be disclosed within the employment contract.
What makes me eligible for employment rights?
To be eligible for all the rights given under the Employment Rights Act 1996 you must be an employee with an 'employment contract' for a UK business. Although simply receiving an employment contract does not instantly make you entitled for all the rights under the Employment Rights Act. In the UK staff of businesses can be broken down into two different employment statuses, with each status entitling the individual to different employment rights. The two statuses an a member of staff can be are either 'employee' or a 'worker' and within this section we will identify the differences between the two:
Criteria for 'employee' status:
- They’re required to work regularly unless they’re on applicable leave - (holiday/sick leave/maternity & paternity leave)
- They’re required to do a minimum number of hours and expect to be paid for time worked
- A manager/supervisor is responsible for their workload - (saying when a piece of work is due and how it should be done)
- They cannot send someone else to do their work
- They get paid holiday
- They’re entitled to contractual or Statutory Sick Pay/Maternity Pay/Paternity Pay
- They can enrol in the business’s pension scheme
- The business’s disciplinary and grievance procedures apply to them
- They work at the business’s premises or at an address specified by the business
- Their contract sets out redundancy procedures
- The business provides the materials, tools and equipment for their work
- They only work for the business or if they do have another job the role is completely different from their work for the business
- Their contract, statement of terms and conditions or offer letter (also referred to as an ‘employment contract’) uses terms like ‘employer’ and ‘employee’ to identify the relationship for contractual purposes
Criteria for 'worker' status:
- They occasionally do work for a specific business
- The business does not have to offer them work and they do not have to accept it - (they only work when they want)
- Their contract with the business will use terms like 'casual'/'freelance'/'zero-hours'/'as required' or other such terminology
- They had to agree with the businesses terms and conditions to get work - either verbally or written
- They are under the supervision or control of a managed/director
- They have some limited rights to send someone else to do their work
- The business deducts tax and National Insurance contributions from their wages
- The business provides materials, tools or equipment they need to do the work
What rights must I adhere to under the Employment Rights Act?
The employment rights depend on your status (whether you employee as a 'worker' or an 'employee'). All rights that 'worker's' in the UK are entitled to are also given to all 'employees' but it is important to note that 'employees' are also entitled to additional rights. Below we outline the rights of both 'workers' and 'employees'
The employment rights that both 'workers' and 'employees' are entitled to:
- Receiving the National Minimum Wage
- Protection against unlawful deductions from wages
- The statutory minimum length of rest breaks
- The statutory minimum level of paid holiday
- To work no more than 48 hours on average per week or to opt out of this if they choose
- Protection against unlawful discrimination - (protects individuals from discrimination against age, gender, marriage status, being pregnant, disability, race, religion/beliefs, sex and sexual orientation)
- Protection for 'whistle-blowers' who report wrongdoing in the workplace
- Not to be treated less favourably if they work part-time
The employment rights that only 'employees' are entitled to:
- Statutory Sick Pay
- Statutory Redundancy Pay
- Statutory Maternity Pay and Leave
- Statutory Paternity Pay and Leave
- Statutory Adoption Pay and Leave
- Statutory Shared Parental Pay and Leave
- Statutory Parental Bereavement Pay and Leave
- Statutory Neonatal Care and Leave
- Minimum notice periods if their employment will be ending - for example if an employer is dismissing them
- Protection against unfair dismissal
- The right to request flexible working
- Time off for emergencies
It is also key to note that even though you may be an employee of the company that this does not instantly make you eligible for all the rights stated above. Some of these rights require a minimum length of continuous employment before they can qualify for them. The exact length of continuous employment will be outlined within the 'employment contract' of the individual. It is important as the employer to consult a professional when you are drafting up your first employment contract to ensure that you are giving your business the correct protection as well as complying with all employment rights.
Looking For Further Information?
Hopefully this article has highlighted the key rights that workers and employees of your business are entitled to under their employment rights and within their employment contract. For more information on topics relating to running your company feel free to explore our Knowledge Base. If you are looking for any further information about company formation, do not hesitate to contact us.
