10/10/2011

By Richard Smith, Head of Product Development and employment law expert at Croner

With the introduction of new employment legislation each year and legal rulings on the application of current law, it’s not surprising that employers get confused about how to treat employees.

But it’s actually the most basic employment principles that are often tripping them up. Few employers are likely to flout the law deliberately, but we often see issues arising due to assumptions that are commonplace in business practice, but are in actual fact little more than old wives’ tales.

So here are our top five ‘Employment Myths

1. “Smaller firms are exempt from paying staff the national minimum wage.”

HM Revenue and Customs has reported this as one of the top excuses of companies not paying the minimum wage. However, the national minimum wage must be paid to all employees, regardless of the size of the company. Enforcement teams are in place to identify companies not meeting these regulations.

The national minimum wage rates from 1 October 2011 are:

- Adult rate - £6.08 an hour
- 18-20 year olds - £4.98 an hour
- 16-17 year olds - £3.68 an hour
- Apprentices — £2.60 an hour


2. “A monthly paid employee's period of notice is one month.”

This is a widely held misconception, as the notice to be given by the employer is either that laid down in legislation or whatever is written in the contract depending on which is the longer. The Employment Rights Act 1996 provides minimum legal notice periods that have to be given by the employer as follows:

- Over one month but less than two years service - one week
- Two years or more service - one week per complete year of service, to a maximum of twelve weeks. This is irrespective of how frequently someone is paid.

The employee however only has to give one week’s notice, regardless of the number of year’s service, unless a longer period has been agreed in the contract.


3. “There is no contract of employment as there is nothing in writing.”

A contract does not have to be written down and can take the form of a verbal agreement, after which the employer is legally required to honour certain employment rights.
Some of the terms of the contract may well appear in offer letters or other correspondence, and may have also resulted from verbal agreements given at interview or at meetings both before and after employment commences

4. “An employer can sack someone on the spot without following any form of procedure providing the employee is guilty of gross misconduct.”

This is highly risky, leaving the employer open to an unfair dismissal claim if the employee has over a year’s service and a possible breach of contract claim for those with under a year’s service if contractual procedures are not followed. Even where an employee is caught red handed stealing from their employer, the employer must follow a fair procedure before dismissing the employee and they should be given an opportunity to explain themselves at a properly conducted meeting before decisions are made.


5. “An employee with less than one year's service can be dismissed for any reason.”

It is true that an employee with less than a year’s service has fewer employment rights than someone who has a year’s service or more, in that they cannot make a general unfair dismissal claim. However, there are over 20 employment issues where an employee with under one year’s service can make an unfair dismissal complaint. These include all forms of discrimination (including age discrimination), and other issues such as, dismissal for exerting a statutory right, or in connection with their trade union membership.

Take action now

With the latest statistics from the Ministry of Justice reporting an increasing number of employment tribunal claims, it’s more important than ever to follow the correct procedures for employee misconduct, minimum pay and even basic employment contracts, in order to avoid the risk of potentially costly claims.

So to make sure you stay within the law, protect yourself against claims and save money, go back to basics and address your fundamental employment practices, especially when it comes to the hiring and firing of staff. If you are unsure about any aspect of employment law, seek professional advice.


Visit Croner to find out more.


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