Do you have the right legal cover in place? Beverley East from Abbey Legal Services, on behalf of the Federation of Small Businesses (FSB), provides advice.
Despite the promises to decrease red tape for employers, employment legislation is constantly being introduced and up-dated. In terms of a claim, three in five employers have had an unfair dismissal brought against them with many ‘tagging’ on a discrimination claim. Adding to this is of course the increasing financial (not to mention time!) costs of tribunals, as well as SME targeted investigations by HM Revenue and Customs.
70% of employers have no legal protection to guard against employees making claims against them and are often forced to use settlement agreements to avoid these claims.
The bottom line is that if you’re an employer and owner of a small business, you simply cannot afford to be without legal protection insurance. Here are a few things to look into to ensure your business has the right legal protection in place (fuller information is available at www.fsb.org.uk/benefits):
1. Know where to go
Without the right legal support, you are likely to find yourself in difficult situations that are almost impossible to get out of without significant impact on the business. As and when a problem arises, it is vitally important for small business owners to have a helpline for advice, and access to lawyers and specialists as many problems can be prevented from turning into crises this way.
2. Know your stuff
Need it be said that it’s important that problems are nipped in the bud. Better yet, many problems can be prevented from arising in the first place through simple measures such as having access to correct - and up to date - information. This applies equally to employment and commercial legal issues.
3. Cover considerations
As a small business owner it is of course important to keep costs down. While legal protection can seem like something to consider ‘further down the line,’ it can make or break a business. When researching the right cover, there are a few things that are important to consider:
- Does the product provide access to business legal advice from qualified lawyers?
- Is the access to legal advice granted on a 24/7 basis, 365 days a year?
- Does it include tax advice from revenue trained specialists?
- Does the product cover representation in criminal prosecutions, Employment Tribunals and statutory awards, tax, VAT and PAYE investigations, property, data protection, personal injury pursuit and statutory license protection?
- Does it offer access to information, documentation and advice on employment law, tax, health and safety and commercial law online?
- Does it include PAYE and VAT pre-dispute information gathering?
- Does it offer protection against IR35 disputes?
- Does it cover support for ‘Interviews Under Caution’?
- Does it include advice on TUPE (Transfer of Undertakings Protection of Employment)?
- Does it offer a package for additional services in regards to financial penalties levied by the Employment Tribunal?
4. Watch the PPBs
The introduction of the Employment Tribunal fees (meaning an employee now has to pay a fee to take his or her employer to Employment Tribunals) has lead to a drop in the number of claims being made. However, the claims that are made tend to be larger, more complex and costly ones that often involve an element of discrimination which can attract larger awards that can be extremely detrimental to business and, in some cases, the difference between being able to continue trading or not. Watch this space, and the Party Political Broadcasts (PPBs) leading up to next year’s General Election, and in particular each party’s proposals for potential reforms to the current Tribunal system.
5. Be specific
Cover yourself as best you can by ensuring you have the proper procedures and documentation in place for your specific type and size of business. Every business needs a competent person who is responsible for health and safety in the workplace. If your company has more than five employees you also need to have a written health and safety policy in place. And a risk assessment needs to be carried out to determine potential dangers in the workplace and to show what safety measures you have taken to minimise any risk.
6. Get protection
HMRC investigations can take place at any time - even years after a business has closed. It is therefore important that you consider tax investigation protection whatever size of business you run, but particularly if it’s an SME (small businesses are at particular risk for investigation. In 2011, 33% of HMRC enquiries were related to businesses with a turnover of under £150,000; 71% of these had declared a profit of under £25,000).
Make sure you are covered for any investigation from HMRC. Not only can HMRC investigations be costly, but a full investigation enquiry lasts an average of 16 months. Average accountancy fees to handle an investigation are between £2,000 and £5,000.
7. Dot the 'I’s and cross the 'T’s
Things in the legal sphere can seem to change with the blink of an eye, especially when it’s not your key focus. o make sure you have the correct documentation and that it’s regularly reviewed and kept up to date. Make sure the legal documentation has a designated place so that it can always be accessed by the appropriate personnel and it can be reviewed regularly. Put a review schedule in place - and stick to it.
8. Help is at hand
Legal protection for business is is constantly evolving and changing, therefore plans and procedures can easily become out of date and lose their value, so access to bodies like the FSB is useful.
While you may be aware that relevant documents need to be kept up to date, much of the time it does take someone with a legal background to know which documents need to be in place and which documents need to be updated more regularly than others, and the potential consequences of not doing so. The FSB, in partnership with Abbey Legal Protection, offers help, guidance and legal protection insurance for small businesses that is free to members.