Starting a business is exciting, but employment law mistakes can be costly and damaging to your company’s reputation. Many startups unknowingly make errors that lead to legal disputes, fines, or even tribunal cases. Here’s how to avoid the most common pitfalls with expert employment law advice.
1. Not Having Proper Employment Contracts
A handshake agreement isn’t enough. Every employee should have a legally compliant contract outlining:
- Job responsibilities
- Salary and benefits
- Notice periods
- Confidentiality clauses
Failing to provide a written contract within two months of employment could result in penalties. Our expert lawyers can help you draft contracts that protect your business.
2. Misclassifying Workers: Employee vs. Contractor
Many start-ups rely on freelancers and contractors, but getting their classification wrong could mean unpaid taxes and legal claims. HMRC closely scrutinises whether a worker should be classified as an employee, which affects tax obligations, rights, and protections. Seeking legal assistance ensures you comply with UK employment law.
3. Ignoring EMI Share Scheme Compliance
Offering EMI share schemes is a great way to attract top talent, but failing to follow the legal requirements can lead to unexpected tax bills. A legal counsel can ensure your EMI scheme is properly structured and compliant with HMRC regulations.
4. Failing to Manage Dismissals Properly
Terminating employees without following proper legal procedures can lead to unfair dismissal claims, which are costly and time-consuming. Steps to take include:
- Conducting fair disciplinary procedures
- Issuing proper warnings
- Providing clear reasons for termination
A fractional GC can help ensure all dismissals are legally compliant, reducing the risk of litigation.
5. Overlooking Workplace Policies and Compliance
Many companies lack clear policies on anti-discrimination, harassment, and grievance handling. Without these policies, businesses may face lawsuits or tribunal cases. Seeking expert employment law advice ensures your policies align with UK employment regulations.
6. Not Staying Updated on Employment Law Changes
UK employment laws frequently change, and non-compliance can result in heavy penalties. A legal counsel or fractional GC can help startups stay ahead of these changes, ensuring ongoing compliance.
Protect Your Startup with Legal Expertise
Avoiding these mistakes can save your startup from unnecessary legal disputes. Whether it’s drafting contracts, managing an EMI share scheme, or ensuring compliance, fractional GCs provide cost-effective legal assistance without the need for a full-time legal team.
Looking for employment law advice? Contact us to safeguard your business today.
Author: Bill Cogan
Bill is a dual-qualified lawyer, licensed in both England & Wales and New York, with a Master's degree from the University of California, Berkeley. As the founder of Seven Legal, Bill delivers practical, commercially focused legal advice to high-growth tech companies and their investors.
Seven Legal provides stage specific legal advice for fast growth technology companies. Built on advising hundreds of founding teams in the UK, US and India with funding, scaling and exiting high growth ventures, our expert tech lawyers will be a growth enabler for your business.
