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Essay: Key aspects of employment law for businesses

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  • Subject area(s): Business essays
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  • Published: June 11, 2021*
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  • Key aspects of employment law for businesses
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An economic downturn is worrying for the employers and the employees. During this time of doubt, organisations should focus on the welfare and moral of their staff. It is understandable that the moral of employees will drop during this time of uncertainty, as economic changes can result in recruitment being put on hold and employees risk facing the possibility of redundancy. If this were to the case, the company would need to handle the situation by following the processes in the correct manner, making sure the changes are communicated clearly and effectively with staff members.

One of the first tasks an employer has when deciding to hire a candidate, is giving their new recruit an employment status. There are many types of employment status, such as: Permanent, Part-Time, and Zero Hour Contract.

Permanent: a member of staff that has been hired for a role without a pre-determined time limit. These employees differ from a fixed term or temporary employee, as both have a pre-determined period of service. Permanent staff often receive benefits like: subsidized child-care, holiday pay, sick leave, or contributions to a retirement fund, in addition to their basic pay.

Part-Time: a member of staff who work fewer hours than a full-time worker. There is no specific number of hours that makes someone full or part-time, but a part-time worker will usually work less than 30 hours a week. This also means the employee is usually paid on a pro-rata basis.

Zero Hour Contract (also know as casual contracts): are staff that are only required to work when their service is needed, meaning there is no guarantee to work for the employee. This also means that the employee is paid for the amount of hours they work.

Sick pay is often not included, although holiday pay should be, in line with working time regulations.

3 reasons why it is important to clearly determine an individual’s employment status.

It is very important to clearly determine your employee’s employment status, as it defines the rights and responsibilities that the employee has, and determines what the employer expects from them. Depending on the employment status, employees are given different rights, like holiday pay. This right is usually given only to full-time or part-time staff, as they are permanent to the company, whereas a zero hour contractor would not be entitled to such rights. An employment status will establish the tax and national insurance that an individual pays on their yearly salary, (i.e. a self-employed individual is not employed by an organisation, meaning they will not be paid by PAYE and will have the responsibility to sort their own Tax and National Insurance). The employment status not only outlines the individual’s responsibilities, but the employer responsibilities also. Employment status dictates what an individual’s employer responsibilities are towards them. (I.e. an employer is liable for handling an employee’s annual leave right however it is not their duty to manage this for a self-employed member of staff)


The importance of work life balance and related legislation concerning holidays, rest periods, working hours and night working

Work life balance is essential to the employment relationship. Within an organisation it is imperative that business objectives are met whilst also enabling staff to have a fair balance of their responsibilities at work and home. Having a healthy work life balance isn’t just essential to an individual’s health and wellbeing, it has also been known to improve productivity. Overworked employees can be at the risk of underperforming which could impact the organisations business.

The current legislation in place to support ‘work life balance’ is the Working Time Regulation (1998). The Working Time Regulations (1998) determines the maximum of weekly working hours, holidays and the daily and weekly rest periods.

Holiday Entitlement is 20 days’ paid statutory annual leave (this will be pro-rated for part-time employees), plus 8 days for public holidays at a minimum.

Working Hours are capped at 48 hours per week maximum unless the individual has signed an ‘opt-out agreement’, which lets the individual work more than 48 hours, although under 18’s have a different right. Under 18’s are not allowed to work more than an 8-hour day or 40 hours per week, and have the right to at least two consecutive days off per week.

Rest Periods can differ depending on the age of the employee. Staff over the age of 18 are entitled to three types of breaks:
A rest break: 20-minute break if working 6 hours or more (depending on the employer this may not be paid), and under 18’s are required to have a 30-minute rest break if they have worked more than 4.5 hours.
Daily rest: 11 hours’ rest between working days (for example, if the individual finishes at 7pm you should not be expected to start work until 6am the next day). Under 18’s should have a daily rest of 12 hours.
Weekly rest: Uninterrupted 24 hours’ rest in a seven-day timeframe (under 18’s have the right to a weekly rest of 48 hours.

Working Time Regulation (1998) also covers the health and working hours of night workers. Night work is categorised between the hours of 11pm and 6am, unless stated otherwise in your contract.

Family/parent-related legal support, including maternity leave, paternity leave, adoption leave and dependant’s leave:

Every employee is eligible for family/parent – related statutory rights. The below is going to outline the statutory rights employees are entitled to, within each different category.

Paternity Leave:
Employees are eligible to paternity leave if they have worked continuous service for the company, for 26 weeks. The individual must be the biological father or the partner/husband of the mother, or holds the duty of the baby’s rearing.

Individuals are entitled to up to 2 weeks’ statutory leave, which must be taken either from the date the baby is born or from any day of the week following the birth. Employees must inform the employer of their paternity leave by the end of the 15th week before the baby is expected, by providing the following details: The start date of the leave; the week the baby is expected; and the duration of leave. This paternity leave does not affect the unpaid leave to attend 2 antenatal appointments that the father or partners are entitled to.

Paternity Pay:
Individuals are entitled to statutory paternity pay of the rate that is currently £145.18 (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate), however organisations may top this up to ‘enhanced paternity leave’. This would be stated within the contract of employment or company policies.

Maternity Leave

Employees are entitled to 52 weeks of maternity leave, no matter what the length of their employment. The 3 different periods of maternity leave are:
Compulsory Maternity Leave: which relates to the two-week period after the birth of the child. This forms part of the OML. Ordinary Maternity Leave (OML): The 26-week period of maternity leave that all pregnant women are entitled to in order for them to care for their child.
Additional Maternity Leave (AML): The additional 26 weeks leave that all pregnant women are entitled to take. This is optional and begins immediately after the OML, (to qualify for this. women must notify their employer in writing no later than 15 weeks before the anticipated due date and must include the date in which the OML leave will start.
Statutory Maternity Pay (SMP):
Employees are entitled to be paid for the 39 weeks of the maternity leave, but to qualify the individual must have worked 26 weeks’ continuous service and must be able to pay the employers share of class 1 National Insurance. The first 6 weeks of maternity leave is paid at 90% (before tax) of the employees’ average weekly earnings. This is then reduced to £145.18 per week or 90% of the typical weekly earnings for the remaining 33 weeks (whichever is lower).
Other Benefits:
» All contractual terms such as holiday or benefits will remain the same except from remunerations during the maternity leave period. » Entitled to paid time of work to attend antenatal appointments during working hours.

Dependant Leave
The definition of a dependant is somebody who depends on an employee for their care. This could be one of the few: spouse, partner, child or parent. Every employee has the right to time off work in order to deal with unanticipated difficulties and emergencies. » There is no set amount of days which an employee can have off, however it is normally one or two days. Some employers may suggest taking annual leave depending on the circumstances, meaning the individual will be paid for their absence. There is no requirement for the employer to pay for this time off.

Adoption Leave
If a couple decides to adopt a child jointly, the main adopter may be eligible for up to 52 weeks off. The other adopter may be able to take paternity or shared parental leave if the company allows this. The main adopter is entitled to paid leave for up to 5 adoption appointments, the other adopter can take unpaid leave for up to 2 appointments. Employees must show the employer document proof showing they qualify for statutory adoption leave, such as a certificate from the adoption agency (which must be a registered agency within the UK). The individual must advise the employer 7 days after being matched with a child and state the start date, extent of leave and when the child will be placed. Adoption leave entitlement is made up from:
26 weeks of Ordinary Adoption Leave and 26 weeks of Additional Adoption Leave.

Entitled to statutory adoption pay (SAP):
SAP gives the individual a maximum of 39 weeks, having the first 6 weeks paid at 90% of normal earnings and the remaining 33 weeks of SAP to be paid at £145.18 a week or 90% of their gross average weekly earnings (whichever is lower) for the next 33 weeks.


Fairness in the workplace is essential to a business running successfully and keeping their employees happy. Below are 2 reasons why employees should be treated fairly in relation to pay:

Gender Pay Gap:
The Gender Pay Gap looks into the difference of the average pay between men and women over a period time no matter what their role is. This means that a CEO’s salary could be compared to an administrator. An organisation that has 250 or more employees are required by law to publish statutory calculations every tax year, which shows the pay gap between their female and male employees salaries.

Motivation is one of the key factors to running a successful business. When an employee is treated fairly by their employer, they feel respected and appreciated. This means that they are much more likely to be motivated at work, maximising their performance and happiness within the organisation. With motivated employees, the company has a better chance at reaching, and hopefully exceeding, their business goals.

The main points of equalities legislation including the concepts of direct and indirect discrimination, harassment and victimisation

On October 1st 2010 the government introduced the Equality Act 2010. This act was set to manage all forms of discrimination. The act offers protection to individuals who have one or more of the 9 protected characteristics. These characteristics are:

Gender Reassignment
Marriage and Civil Partnership
Pregnancy and Maternity
Religion or belief
Sexual orientation

The Equality Act 2010 outlines several types of discrimination, which are: Direct, Indirect, Harassment and Victimisation.

Direct Discrimination
Direct Discrimination would be an employer treating someone with one of the 9 protected characteristics differently to someone without a protected characteristic. An example of this would be if an employer refuses to give an employee a promotion because of his or her race.

Indirect Discrimination
Indirect Discrimination is when organisations policies, procedures or practices have an indirect effect on a group of people who share certain protective characteristics. An example would be if a business decided to change the working hours to an 8am start instead of a 9am start, which would indirectly be discrimination against parents or carers who have responsibilities before/around this time.

Harassment is unwanted and uninvited attention from others, which makes an individual feel intimidated, degraded, humiliated, or offended. This could be between two individuals or a group of people. It can occur face to face, in written communication or telephone calls. An example of this would be if an individual were intentionally undermining a teammate by regularly belittling them.

Victimisation is treating someone contrarily as a result of them making a complaint under the discrimination act.

The concept of the ‘psychological contract’ and examples of policies and procedures, which can underpin this.

The ‘Psychological contract’ is a mutual, unwritten arrangement made by the employer and employee. This ‘contract’ emphasises that the relationship between employers and workers is more than just a transaction regulated by a legal contract. Like in all relationships, both parties hold informal expectancies of each other that – although unwritten – can drastically affect the length and quality of their relationship.

There are many workplace policies and processes that support the psychological contract. A business which has a Learning and Development policy exhibits that the business is enthusiastic to helping the progression of their staff. This shows employees that the organisation has an understanding that high-class guidance will lead to staff working to their highest potential. The employer may expect the employee to stay and make use of the training, which will benefit the organisation in the future.

By giving employees a flexible schedule, it shows that the employer trusts their staff to produce the same quality of work, as if they were on the company’s standard hours contract, which also shows that employers holds an understanding that different life events may sometimes lead to employees having to change their working hours.

Issues to be addressed at the termination of the employment relationship, including:

The differences between fair and unfair dismissal

Termination of employment can end for numerous amounts of reasons, for example; the employee resigning, completion of a fixed term contract, retirement or a member of staff being dismissed.

There are two types of dismissal:

Fair Dismissal
For a dismissal to be seen as fair, the employer must demonstrate that it was due to one of five reasons;

• Redundancy
• Employee conduct
• Contravention of a statutory duty or legality
• Capability (or qualifications)
• Another substantial ‘fair’ reason

If a member of staff is incapable of doing their job because of a capability issue, the employer needs to follow a capability process. This would include notifying the individual of the issue, providing the individual with appropriate development training and to take time to agree on the issue and set clear, reachable goals. If the employee is still not capable to do their role, and the employer has followed the capability process, the employer has the right to dismiss the employee.

Unfair Dismissal

Unfair dismissal is when an employee has been dismissed, without the company following the correct procedure, or the reason of dismissal was because the individual has a protective characteristic, like pregnancy.

Some dismissals are categorised as ‘automatically unfair’ if they are because of or affected by;

• Discrimination
• Pregnancy
• Part time or fixed term employment
• Family reasons such as parental or adoption leave
• Whistleblowing
• Acting as trade union representatives
• Joining or not joining a trade union

If the employee would like to claim their dismissal as unfair they must;

• Not be within an excluded group.
• Been employed by the company for at least 2 years’ continuous.
• Submit the claim within three months of being dismissed.
• Be an employee and not a worker

The importance of exit interviews to both parties
Exit interviews are an interview that happens when an employee has decided to leave the company voluntarily. A member of HR or the individuals’ line manager are usually the people carrying out the exit interview. This interview allows the employee to express their opinions of the company (positive and negative), and also gives the company a chance to find out the reason to why that individual left, hopefully providing the employer with a chance of improving, which is important to both parties (see below for more).

Importance to the Organisation:

• The company is given the opportunity to retain a valued member of staff
• The opinion from the individual will be honest, giving the company an insight to how employees perceive the business
• The business is able to use the opinion given to improve the processes which the organisation carries out

Importance to employees:

• Gives the individual an opportunity to voice their opinions
• The individual will hopefully leave on good terms
• The individual will be able to feel as if they have helped improve the business in one way or another

The key stages to be followed in managing redundancies and the impact of redundancy on the whole organisation

The key stages to be followed when managing redundancies:

Preparing and Planning

Organisations should always try to avoid redundancies and consider implementing several options such as:

• Cutting the hours of work
• Putting any recruitment on hold
• Offering early retirement to volunteers
• Stopping/decreasing overtime
• Suspending salary increases for a certain period


If there is more than one member of staff in the same role, the employer must follow a fair selection procedure to decide which individual(s) are to be nominated for redundancy. When the group has been recognised, the manner of selection must be agreed. This process must be fair and can be grounded on;

• The length of service
• Attendance record
• Skills, abilities and educations

The selectors will be required to give each individual a score against the other each from the selection measures.

Consultation and alternative roles

Employers have a duty to consult with staff before making any redundancies. There are two types of consultation; collective and individual.

Collective Consultation is where an employer proposes to make 20 or more employees redundant at one establishment over a period of 90 days. The employer has a statutory duty to inform and consult staff representatives such as recognised trade unions. There are no time frame’s on how long the consultation should last but there is however a minimum consultation period. This varies on how many redundancies the employer is proposing to make.

Employers must provide representatives with details of the reason for the proposed redundancies, numbers and descriptions, proposed method of selection, proposed method to carry out the redundancies and the proposed method of calculating the redundancy payment.

Individual consultation is where the employer has to consult individually with every individual who is potentially effected by redundancy. These meetings are normally handled by the line mangers but a member of HR can be present.

Alternative roles

If possible alternative employment must be offered to affected employees if there are vacancies within the organisation to fill. Employees who accept an alternative role are entitled to a 4-week trial period. If both parties at the end decide this is not a suitable alternative, employees may still claim for redundancy.

4. Notice of redundancy, appeals and termination process

The employer should notify in writing all individuals who are selected for redundancy that they are at risk and invite them to a meeting. The employer must consider any counter proposals the employee puts forward to avoid redundancy. Once the consultation is complete it is down to the employer to make a decision on whether or not the employee is to be made redundant.

If the decision is redundancy the employer must in writing inform the employee of the redundancy payment they will receive. Employees with 2 years’ service are entitled to a statutory redundancy payment. This is based on age, length of service and weekly pay. Employers can choose to pay enhanced redundancy or pay individuals with less than 2 years’ service.

Employees must have a notice period before their employment ends. The statutory notice period differs depending on the employee’s length of service

Employees have the right to appeal against the redundancy decision. However, there are no obligations that an employer has to offer an appeal process. it is however good practice to do so.

5. Survivors

After the redundancy process has finished, it is natural for the remaining workforce to feel demoralised and anxious about their job security. This is also known as ‘Survivor Syndrome’.

In order to reduce the potential of this happening employers need to be;

– Open and honest throughout the redundancy process
– Handle the redundancy process in a fair and effective way
– Provide a positive attitude for future plans
– Ensure that manager have the relevant training to help them identify anyone who needs that extra support during the period of change.

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