Two Important Insurance Policies Businesses Think They Have (But usually do NOT have)

It is a legal requirement for any company that employees staff to hold employer’s liability insurance, and no doubt there will be numerous other policies you hold as a business owner. But do they cover every area for which you need protection?

For example, do they cover the effects of cyber-crime? Are you covered for the cost of acquiring cover staff if someone is off work due to an injury? If it happened at work and was due to negligence, your employee liability cover might kick in, but what if it happened outside of work? If you are a sole trader who does not need employee liability cover, what would happen if you had an accident and suffered injury yourself?

Traditional insurance policies rarely include all these eventualities. Fortunately, you can still get the cover you need through specialist insurance policies. Cyber risk and key worker injury insurance plans are available to all businesses, whatever their size.

How to Cope with the Effects of Cyber Crime

Most organisations have no option but to rely heavily on IT that can be adversely affected by viruses or hacking. It is a sad fact that despite all efforts at protection, breaches of data security and successful cyber attacks are still happening in the small and medium business community, as well as in major companies and private sector bodies. The effects can be wide ranging and devastating, from financial penalties and specific extra costs, to loss of business and reputation.

The only way for you to have true peace of mind about this is to cover all potential risks with specialist insurance.

How to Protect a Business from the Effects of Accidents

In a small business, losing a member of staff for a sickness period following an accident can make an enormous difference to productivity. Unless someone else can do the work, in extreme cases you may be unable to fulfil orders and get a reputation for letting customers down. Whether the accident occurred at work or in the employee’s own time, there may well be heavy costs that are not covered by your liability insurance.

With the right insurance plan however, these costs can all be covered. And you could be able to arrange for the best health care and rehabilitation therapies, all covered by your insurance policy, to get your worker fit and back on the job in the shortest possible time. Everyone can benefit when this happens and it will do wonders for the morale of your whole team.

Your local bookkeepers are likely to have experience of these types of policies and will be able to direct you to a good insurance broker, so it’s worth getting their opinion on what you need and where to go for it.

What to Consider When Taking on Your First Employee

When your business has developed to the point where you need additional help, courage is needed for the next step. It has to be taken though, otherwise your business won’t be able to grow any more.

According to the government’s web page about taking on your first employees, there are seven things you need to take action on immediately. Actually you’ll find there is a lot more to it than that, but its list is a good starting point.

What Does the Government’s List Cover?

The first item is to decide how much you will pay. It has to be at least the National Living Wage (currently £7.20 per hour) unless the worker will be under the age of 25, when the National Minimum Wage applies for the appropriate age range. If you think the worker might be worth more than that, and you can afford it, you can decide on a higher starting figure, which will possibly attract more suitable candidates for the job, but take care not to set a precedent that you may not be able to keep up.

To comply with employment law, you may need to have Disclosure and Barring Service (DBS) checks of the criminal records of employees, depending on the nature of your business, and whether it involves security, children or other people who are vulnerable. You must also ensure that all applicants are not here illegally and have a right to work. And you should have employers’ liability insurance in place before employment starts.

If this is your first employee, in 2016 you probably won’t have to have a workplace pension in place yet, but from 2017 it will most likely be a requirement, so you need to start planning for it. You do need to register with HMRC as an employer.

Once you have your chosen employee, you have up to two months to issue a written statement of employment particulars or, if it applies, before the employee travels abroad for you. The statement should include the terms of the contract that automatically applies once a job offer of longer than 1 month has been issued and accepted.

What Else Should Be Considered?

Among the considerations not covered above is the legal minefield of recruitment. Great care must be taken to avoid an allegation of discrimination in any form, whether you advertise for free on social media or go the more expensive advertising routes or use a recruitment agency. You will also need to set up employment policies and procedures to cover things like bullying, staff grievances, holidays, sick pay and much more.

Even with only one employee, you must set up a payroll and make the appropriate contributions of tax and National Insurance and report on this to HMRC in real time. Your local bookkeepers will be able to help with this. In many cases, they often take over all the payroll activity so the business owner doesn’t need to worry about it. They’ll also be happy to advise and help on all the other aspects of taking on the first employee, including whether you could do with other professional help for anything.

A Useful Summary of Employment Law Changes April 2016

April 2016 sees the introduction of a number of changes to employment law. If you are an employer, read on for a summary.

The National Living Wage

The National Living Wage (NLW) was introduced on 1 April 2016. The new pay rate should not be confused with the National Minimum Wage (NMW) which still applies, or the Living Wage, which is a voluntary rate.

If you have employees aged 25 or over, the NLW will be payable without exception. This includes agency workers, casual labourers, apprentices who have finished their first year and agricultural workers. The rate is currently set at £7.20 per hour, and will be reviewed each year in April. We will be covering the National Living Wage in more detail next month.

Sick, Maternity, Paternity, Shared Parental and Adoption Pay Frozen

These statutory rates have all been frozen for 2016/17 at the rates at applied for 2015/16. For sick pay this is £88.45 per week. The others are £139.58, or if the normal weekly wage of the person involved is less than that, it is 90% of their normal earnings.

Employer National Insurance Contributions Abolished for Apprentices Under 25

From 6 April, employers no longer have to pay Class 1 National Insurance contributions on earnings that fall below the upper earnings limit for apprentices under 25 years of age.

Pensions Changes

With the introduction courtesy of the Pensions Act 2014 of the new state pension for anyone reaching the pension age from 6 April, the pension rules for employers have changed. There will be no more contracting out for defined-benefit schemes. Employers in the private sector can therefore increase employees’ pension contributions and reduce pension accrual.

Employment Tribunals

From 6 April, the rules of Procedure in the Employment Tribunals (Constitution and Rules of Procedure Regulations 2013) changed, so that there is a limit to the number of postponements that a party can be granted, unless the circumstances are exceptional. This is to avoid significant delays in decisions and related rising costs. What is more, from 6 April, increases in the limits on certain employment tribunal awards came into force. The limit on a week’s pay for calculating redundancy payments will increase from £475 to £479 and the maximum compensatory award for unfair dismissal will increase from £78.335 to £78,962 providing it is lower than the additional compensatory award cap of 52 weeks’ pay.

If you have any queries about these changes, bring them up with your local bookkeepers. They will be happy to guide you through the implications for your business, and just as earnest as you to ensure that you don’t fall foul of any of the new rules.