16 times a smaller business should be thinking about using a lawyer, part two: People

Author: Emma Shipp
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Family businesses

We don’t need to tell you that family businesses bring a whole extra dimension of complexity. Often there is more at stake than just commercial success. Family issues need to be considered if trouble isn’t to permanently damage family relationships. 

Issues often include which members of the family are to be employed by the business and on what terms. For more mature businesses, generational issues and succession may be vital. 

Clarity and early agreement are key. A “Family Charter” may make all the difference and keep the business on a commercial footing.

Hiring employees

Finding the right people for your business can be difficult and time consuming. There are many legal obligations involved in being an employer. Some of them include:

  • having written terms of employment; 
  • having procedures to deal with problems; 
  • not directly or indirectly discriminating (and having policies in place to ensure everyone is treated fairly);
  • following Health & Safety requirements; and
  • accurately calculating and managing payment and records (both in relation to the employee but also HMRC). Calculating how the National Minimum Wage applies to particular circumstances may be particularly difficult. 

In some cases formal compliance can be achieved by using standard forms and documents. If no problems arise, and you don’t have to refer to them again, that’s money saved. If you don’t insure your building and it doesn’t burn down, that’s money saved as well. 

Properly considered and customised documents will provide extra security and save time and money if a problem with an employee actually arises. 

Importantly, employee documents don’t just cover the “employment details” such as pay, hours and policies. If your employee will be responsible for acquiring and maintaining relationships with customers (or will access commercially confidential information), making them attractive to a competitor, an expertly drawn contract protecting the interests of the business is essential. 

And don’t forget, taking some time and trouble to get the documentation right for employees, at the outset, will often give the right impression of how your business regards its employees.

We’ve only scratched the surface of all the employment matters you need to think about when hiring employees. Finding the right employment law specialist at this point will save you time, money and stress in the long run.

Share schemes and incentives

In the early stages you may not be able to reward your employees to the same extent that a more mature business can by offering higher salaries and regular bonuses.  However, giving shares or providing a share option scheme to employees can be very attractive and it also aligns the employees’ interests with that of the business. 

But be aware that employee share schemes and incentives are a complicated area and the consequences of getting them wrong are serious. A flawed scheme may generate substantial tax liabilities unnecessarily, it may interfere with the funding or sale of the business or it may work unexpectedly so that the employee receives much more or much less than they should. As an incentive the wrong arrangement may be counter-productive. The availability of Enterprise Management Incentives, Go to Share Schemes and Entrepreneurs Relief from Capital Gains Tax is also likely to be an important consideration. In short, you need an expert legal adviser to help with this. 

Health, safety and Covid-19

Having robust Health & Safety policies in place is vital for all businesses and getting it wrong can trip up the unwary (quite literally).  Obtaining the correct Employers Liability Insurance is important but not the whole answer as injuries to employees or visitors can have serious consequences. In a serious case directors may be prosecuted, key staff may be called as witnesses in court or be tied up managing a claim. Urgent remedial action may be costly. Adverse publicity may damage the reputation of the business. The recent pandemic has added new risks and concerns about the correct way to keep people safe and comply with regulations.

Legal advice to assist with tailored H&S policies is the best way of managing the risk and can also provide invaluable advice about your sector’s industry norms as well as your basic legal obligations.


Want to find the right lawyer for your business? Book your free 30-minute consultation with one of our advisors by clicking here. We’ll talk through the options and suggest at least two law firms that we think are a good fit for your business. We aren’t paid any commission and you won’t be under any pressure to work with any law firms we put forward.