Direct Access Barrister
Business & Commercial
Business guide · please read and keep
Hiring your first employeesThe documents and duties that come with becoming an employer — and the clauses that protect the business when someone leaves
Taking on your first staff changes your legal position more than almost any other step a small business takes. This note explains what you must put in writing and when, the difference between employees, workers and contractors, and the protective clauses that matter most when — years later — someone leaves for a competitor. It is general information, not advice on a particular hire.
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Employee, worker or contractor — the label is not the lawRights and obligations turn on status, and status turns on the reality of the relationship, not what the contract calls it. Broadly: an employee works under your control, personally, with mutual obligations — and gets the full set of rights (unfair dismissal after two years, redundancy pay, family leave). A worker sits in the middle — entitled to minimum wage, paid holiday and protection from discrimination, but not unfair-dismissal rights. A genuine self-employed contractor runs their own business and can send a substitute. Calling an employee a contractor does not make them one; if a tribunal or HMRC re-labels the relationship, back-dated holiday pay, tax and penalties follow. If someone works set hours, under your direction, only for you — treat them as what they are.
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What must be in writing, and whenA written statement of particulars is a legal entitlement from day one of employment — not something to sort out once things settle down. It must cover pay, hours, holiday, place of work, notice, probation, sick pay and more. In practice you meet it with a proper employment contract, which is also where the terms that actually protect the business live. Alongside it, an employer needs: employer’s liability insurance (a legal requirement, with daily fines for going without), PAYE registration, auto-enrolment pension duties, a right-to-work check for every hire, and — once you have five staff — a written health-and-safety policy.
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The clauses that earn their placeProbation and noticeA real probation period with a short notice provision lets both sides part cheaply if the hire is wrong. After probation, set notice you can live with in both directions. Confidentiality and IPEverything created in the course of employment should belong, explicitly, to the company — code, designs, customer lists, know-how — with confidentiality that survives departure. For a business whose value is what it creates, this is the clause that protects the balance sheet. Restrictive covenants — drafted narrow, or not at allNon-solicitation of customers and staff, and (sparingly) non-competition for a limited period and area. The law’s rule is unforgiving: a covenant wider than reasonably necessary to protect a legitimate interest is void entirely — the court will not trim it down for you. A modest, precisely-drafted six-month non-solicit is worth more than an ambitious twelve-month non-compete that turns out to be waste paper. Deductions, garden leave and pay in lieuA deductions clause (so an unreturned laptop or training cost can lawfully come out of final pay), a garden-leave power for sensitive roles, and a pay-in-lieu-of-notice option that keeps the covenants alive. Small clauses; large savings at exit.
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When employment endsTwo years’ service brings unfair-dismissal rights, and from then on a fair dismissal needs a fair reason and a fair process — but discrimination and whistleblowing claims need no qualifying period at all, so process discipline matters from day one. Where a parting needs certainty, a settlement agreement — the employee waiving claims in exchange for an agreed package, with independent advice on their side — is the clean instrument, and the employer typically contributes to the employee’s advice costs. (We advise employees on these too: see the settlement-agreements service.) The pattern in employment disputes: they are almost never about the decision itself, and almost always about the documents and process around it — the contract that was never signed, the probation that was never confirmed, the warning that was never written down. The fix costs an hour at the start, or a five-figure settlement at the end.
Where we come in
A fixed-fee employment contract drafted for your actual roles — with the covenants set at a width a court would enforce — or a review of the contracts you already use. When a departure turns difficult, a candid opinion on the exposure and the clean route out, before anything is said or signed. This note is general information about employing staff in England and Wales and does not constitute advice on a particular hire or dismissal. Thresholds and rates change; check the current position before acting. |