Tier 1 Entrepreneurs – Understanding UK Employment Law

Business people shaking hands

During the application process for a Tier 1 Entrepreneur Visa, Immigration officials will seek assurance from your business plan and interview that you have an understanding of UK employment law.  Part of the requirement for being granted an extension on your Tier 1 Entrepreneur Visa is creating full-time jobs for at least two settled persons in the three years you have held your visa.  And to fulfil this requirement, you will need a basic understanding of employee rights, and employer duties and responsibilities.

The best immigration solicitors in London can provide you with expert legal advice on obtaining and extending a Tier 1 Entrepreneur Visa and applying for Indefinite Leave to Remain (ILR).  At OTS Solicitors, we can provide expert employment law advice to ensure you meet the recruitment requirements for your extension and ILR application.

A basic introduction to UK employment law

UK employment law derives from three sources:

  • Statute – made by Parliament –
  • Common law – made by the courts
  • European law – this will change when the UK leaves the European Union, sometime after March 2019

employment contracts

employees do not have to be given an employment contract.  However, within two months of starting, they must be provided with a Statement of Particulars.  This must include the following information (this list is not exhaustive):

  • The names of the employer and employee
  • The date the employment began
  • The employees pay
  • The date and intervals the employee will be paid
  • The employee's place of work
  • Job title and basic job description
  • Any collective agreements which directly affect the terms and conditions of the employment
  • Any terms relating to holiday and sick pay

If a Tier 1 Entrepreneur Visa holder does not provide a statement of particulars, fails to provide one with all the necessary terms or a question arises as to the particulars which ought to have been included, a complaint can be brought in the Employment Tribunal, which will decide what those particulars should have been.  In addition, as the best immigration solicitors in London will tell you, there is a serious risk your extension will not be granted.

The contract of employment is a document which sets out the rights and obligations of the employer and employee.  As a result, the contents and the construction of the contract are of primary importance in determining the extent of the obligations and in deciding when one party is acting outside the scope of the employment contract and is, therefore, in breach.

If you do choose to have an employment contract drafted (and it is highly recommended that you do so), it should contain the following terms (again, this is not an exhaustive list):

  • The names of the employer and employee
  • The place and hours of work
  • The employee’s duties
  • Details regarding the probationary period (usually 3-6 months)
  • The hours of work and salary
  • Holiday and sickness entitlements
  • Disciplinary and grievance procedures
  • Expenses policies
  • Confidentiality clauses
  • Data protection responsibilities
  • Health and safety policies

An employee’s minimum rights under statute

Under UK statute law, all employees must be paid the National Minimum Wage.  From 1st April 2018 the National Living Wage for those aged 25 and over will rise from £7.50 to £7.83 per hour and the national minimum wage rate will rise for 21 to 24-year-olds from £7.05 to £7.38 per hour, for 18 to 20-year-olds from £5.60 to £5.90 per hour, for 16 to 17-year-olds from £4.05 to £4.20 per hour, and for apprentices from £3.50 to £3.70 per hour.

Firms who fail to pay the minimum wage are not only subject to a civil penalty, but they can be ‘named and shamed’ on a list published by The Department for Business, Energy and Industrial Strategy.

Holiday pay

employees have a statutory right to holiday pay.

The Working Time Regulations 1998 (WTR 1998) entitle a worker to be paid:

  • in respect of any period of statutory holiday
  • in lieu of any statutory holiday entitlement accrued but unused on termination of their employment

Holiday pay entitlement is made up of a minimum of four weeks' annual leave (20 days for a regular full-time worker) each leave year (via The Working Time Directive) and an 'additional entitlement' to 1.6 weeks of annual leave (eight days for a regular full-time worker) each leave year, which is a right under domestic legislation only.

Under the WTR 1998, during any period of statutory holiday, a worker is entitled to be paid at the rate of a 'week's pay' for each week of holiday.

Pensions

Since 2012 employers have had a duty to enrol their workers automatically into a pension scheme meeting minimum standards ('a qualifying scheme') and to pay a minimum level of contributions to that scheme on behalf of workers.

Workers can opt out of the auto-enrolment regime, but employers cannot seek to induce (or take any action to cause) workers to do so.  employees who opt out must be re-enrolled automatically every three years; however, they can choose to opt-out again if they wish.

Sick pay

There is no law which compels employers to pay sick pay; however, sick pay provisions can be added to an employment contract

employees may be entitled to Statutory Sick Pay if they have been off work for four or more days.  This is currently paid at the rate of £89.39 per week and is paid to employers.

Discrimination

As an employer, it is essential you understand your responsibilities under the Equality Act 2010.  Under the Act, an employer cannot discriminate against an employee for possessing one of the nine protected characteristics.  These are:

  • age
  • disability
  • gender reassignment
  • race
  • religion or belief
  • sex
  • sexual orientation
  • marriage or civil partnership
  • pregnancy and maternity

An example of unlawful discrimination is firing a female member of staff because she announces she is pregnant. 

It is easy to get on the wrong side of discrimination law.  Therefore, it is always good practice to have your job advertisements and employment contracts and policies checked by a solicitor to ensure they are compliant with the Equality Act 2010.

In summary

This article is only a small snapshot of employment law in the UK.  To ensure you will be eligible to extend your Tier 1 Entrepreneur Visa, it is imperative you seek legal advice when creating and filling the required two full-time positions for settled persons.

OTS Solicitors is one of the most respected immigration law firms in London and is a Legal 500 leading firm.  By making an appointment with one of our Business Immigration solicitors, you can be assured of receiving some of the best legal advice available in the UK today.  Contact us on 0203 959 9123 to speak to one of our Immigration consultants.

Please note, this article cannot be taken as legal advice and is for information purposes only.  To provide legal advice, we need to receive your formal instructions.

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