Comment: Top legal tips for setting up your own business

Travlaw’s Ami Naru outlines the important initial administrative steps

Q

I have worked in the travel industry for 15 years and am now in the process of setting up a travel agency. At the moment it is just me, but in the near future I will need to employ staff – something I have never done before. Is there anything I need to be aware of or make sure I do?

A

Firstly, that’s amazing that you are putting your travel industry knowledge to use and potentially creating jobs for others.

The key decision to make is whether you wish to employ staff, have workers that you call upon when needed or indeed engage with self-employed consultants. In broad terms, employees have the most rights, workers have a few rights and the self-employed have very few rights.

This decision may depend on how certain you are that you can provide regular work and, of course, whether you can pay staff on a regular basis. If you prefer to have some flexibility as to when you use staff or don’t have certainty of income flows, then it may be sensible to explore using workers on zero‑hours contracts, agency staff or consultants.

When employing staff, it is important that employees are paid at least the National Minimum Wage, which will rise in April to £12.21 for those over 21. Also, an employer must give employees and workers a document stating the main conditions of employment (such as hours, rate of pay etc) when they start work. This is known as a written statement of employment particulars. It is not an employment contract.

However, I would recommend that when you employ staff, you should provide them with a contract of employment specifying further details and protecting your business from the outset; for example, what the employee can do with confidential information, what the probationary periods are and what happens when the employee leaves. The last thing you want is for someone to start with you, tap into your great business idea and then run off with it – plus your client details and intellectual property – and set up in competition.

Similarly, ensure that you are not inducing a person you are about to employ to breach any restrictive covenants that they may have with their soon-to-be former employer, as the last thing you want is to be involved in a dispute.

If you are going to employ staff, you will also need to register with HMRC and ensure that you have set up PAYE.

You may also need to set up a workplace pension scheme. This is the case if your employed staff qualify for auto-enrolment purposes, are aged between 22 and state pension age, earn at least £10,000 per year and usually work in the UK.

Employers need to make sure that they have employer liability insurance in place before they employ staff and display the certificate of insurance in the workplace. Failure to have employer liability insurance in place could result in a fine of £2,500 and failure to display the certificate a fine of £1,000.

As with other aspects of starting a business, it may seem like there’s a lot to organise, but once the initial administrative steps have been undertaken they do not generally have to be repeated.

It is important to keep up to date with changes in the law and statutory rates of payments to employees. All the best in your new venture!