Employing people

Understand your responsibilities


Business success today increasingly depends upon competitive advantage brought about by the contribution that employees make through the use of their skills and experience. We are all well aware of the value of well motivated and productive employees; however employing people can, if handled badly, cost time, money and risk legal challenge.

There are a number of employment practices and measures which, if implemented effectively, can help small firms to be more effective, more profitable and grow.

Planning your people needs, anticipating potential problems and explaining to employees what they can expect from you as their employer and what you can expect from them are among the essential steps. Planning your people requirements is vital. Anticipating employment needs in relation to your business needs over the next 6 to 12 months can help you save the costs of overstaffing, redundancies or lost opportunities through not having the right or sufficient staff.

Recruiting employees can be costly if it goes wrong. It is always worth considering whether you really need new employees – can existing employees do the job or be trained for it? If new employees are needed, would part-time or temporary workers be more suitable? An essential task here though is to clearly understand what the job’s main purpose and key tasks are. Drawing up a Job Description should challenge you to clarify your requirements avoid missing vital information and enable you to get a clear idea of what is required.

Once the job has been clearly defined, it is essential to have a Person Specification. This is a ‘pen picture’ of the ideal person for the job. It identifies the essential and desirable skills and personal qualities to look for but be careful not to specify unnecessary or marginal requirements that might exclude people with disabilities.

There are a number of options which need to be considered when it comes to attracting external candidates for your role.

  • Job Centres
  • Employment agencies / recruitment consultancies
  • Local careers services
  • Advertisements in local, national or specialist press
  • Internet – own website, job boards etc

Careful consideration needs to be given as attracting candidates is normally relatively expensive – consider where potential candidates might look for jobs and obtain information about the readers or users of the media you are considering.

Interviews are still the most common form of selection and can be an effective way to judge whether someone is the best person for the job. They should be a two way process – you want to find out if the applicant can do the job; the applicant wants to find out about the company, the job, how much it pays and other employment terms. Don’t forget the recruitment process is often the shop window of your business to potential employees. In interviews it is not just the applicant who is being judged – a badly prepared interviewer can create an unfavourable impression of the company.

Employment Contracts

Having selected your employee the key task now is to confirm the terms of that employment. All employees have a contract of employment which forms the basis of the employment relationship. A contract is made when the offer of employment is accepted. A number of rights and duties, enforceable through the courts, arise as soon as this happens.

Although most employment contracts need not be in writing to be legally valid; a written contract is a very good idea not least because it can minimise later disagreements. Furthermore the Employment Rights Act 1996 requires employers to provide most employees, within two calendar months of starting work, with a written statement of the main terms of the contract including:

  • the employer’s name
  • the employee’s name
  • the job title or a brief job description
  • the date employment began the place of work and the address of the employer
  • the amount of pay and the interval between payments
  • hours of work
  • holiday pay entitlement
  • sick pay arrangements
  • pension arrangements
  • notice periods
  • where the employment is not permanent, the period it is expected to continue
  • where the employment is for a fixed term, the date when it is to end
  • grievance and appeal arrangements
  • disciplinary rules and any disciplinary or dismissal procedures
  • any collective agreements which directly affect the terms and conditions
  • where the person is required to work outside the UK for more than one month certain conditions

It is recommended however to include in any written contract of employment clauses which further protect your business such as use of company property, confidentiality, monitoring of e-mail and internet usage, post employment restrictions, discoveries, inventions and intellectual property issues.

Policies & Procedures

In addition to written contracts or terms of employment it makes good sense to have written company rules and a number of Company policies or procedures.

Good company rules benefit employers and employees. They make clear what conduct the employer considers is acceptable and what is unacceptable. Written rules are less likely to be misunderstood and they should be available to all employees. They also make sure that employees’ conduct and job performance meet certain minimum standards.

From 1 October 2004 all employers, regardless of size, must follow the statutory disciplinary and grievance procedures.

Typical written procedures might include:

  • General rules
  • Disciplinary procedure
  • Grievance procedure
  • E-mail and internet policy
  • Equal opportunities policy
  • Health and Safety policy
  • Maternity policy
  • Prevention of harassment and bullying
  • Capability –poor performance
  • Capability – ill health
  • Time off for dependants and other leave
  • Parental leave and application form
  • Adoption leave
  • Flexible working and employee application form
  • Paternity leave policy
  • Whistle blowing at work

Statutory Rights

Generally employees are entitled to a number of statutory rights. These include the right:

  • not to be discriminated against (including the right not to be dismissed) – on grounds of:
    • race
    • sex
    • marriage
    • disability
    • sexual orientation
    • religion or belief
    • By December 2006 there will also be protection on the grounds of age
  • to equal pay – with members of the opposite sex if it can be shown that they are doing like work or work of equal value
  • not to be unfairly dismissed
  • for most employees to complain to an Employment Tribunal within three months of their dismissal, provided they have at least one year of continuous service. No service period is required for certain reasons for dismissal such as membership or non-membership of a trade union etc
  • to an itemised pay statement
  • to maternity benefits/rights
  • to paternity benefits/rights
  • to adoption leave
  • to parental leave
  • to time off for dependants
  • to apply for flexible working
  • to notice of termination of employment
  • not to have unlawful deductions from pay
  • to pay when laid off
  • to redundancy pay
  • to a safe system of work
  • to statutory sick pay (SSP)
  • to time off for certain duties such as public duties and issues such as looking for work if declared redundant
  • trade union membership
  • to protected employment rights
  • to written reasons for dismissal on request
  • to minimum pay
  • to annual leave and working time limits
  • to protection from being required to work on Sundays in certain circumstances
  • to payment on insolvency of the employer
  • to be accompanied at disciplinary and grievance hearings
  • for part-time workers to be treated no less favourably than comparable full timers
  • for employees on fixed-term contracts to be treated no less favourably than comparable permanent employees
  • to protection when making disclosures of wrongdoing to the employer

In most cases individuals have the right to make a complaint to an Employment Tribunal. If an employee makes a complaint because they have been dismissed – or suffered action short of dismissal, such as loss of pay or seniority – they, and the employer, must comply with the new statutory disciplinary procedures. These involve the employer giving the employee a statement in writing of the reasons for the dismissal; holding a meeting to discuss the problem; and, where necessary, hearing an appeal. If the procedures have not been followed then the tribunal may well judge the dismissal ‘automatically unfair’


A contract can be ended by the employer or employee, normally by giving the required notice of termination. But if the employer fails to give required notice, the employee can make a claim to the courts for damages for wrongful dismissal. Alternatively, if the employment has been terminated, for a reason or circumstances the employee considers could constitute unfair dismissal a claim can be made to an Employment Tribunal. Where the employee leaves without giving the required notice, the employer may also have, in certain circumstances, a right to claim damages. There are exceptions, where no notice is required – where dismissal is for gross misconduct or where constructive dismissal occurs.

An employee is dismissed when the employer terminates an employee’s contract (the expiry of a fixed term contract is a dismissal). A resignation is normally considered to be termination by the employee and therefore usually when an employee resigns no dismissal has taken place. But in certain circumstances an employee may resign because the employer has broken a significant term of the contract. This is known as constructive dismissal.

A dismissal will normally be fair provided the employer had sufficient reason for the dismissal and acted reasonably in the circumstances surrounding the dismissal. When considering the dismissal of an employee you should ask whether:

  • there is sufficient reason for dismissal
  • reasonable alternatives to dismissal were considered
  • the dismissal is consistent with previous action by you and any disciplinary procedure
  • the dismissal is fair, taking all relevant factors known at the time into consideration
  • you have, as a minimum, followed the statutory disciplinary and dismissal procedures
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