What should I do to manage my IMPORTANT RELATIONSHIPS?
Business is all about people and there are a number of key groups of those that you need to have good relationships with including:
- Other third parties e.g. suppliers
Let’s look at each of these in turn.
In the beginning, it is less usual for you to need people working for you. You might outsource certain things to consultants initially. But as your business grows, you may wish to employ people. If you do there are certain things that you are legally obliged to do.
Also be aware that even if you think you are using third party consultants, in certain circumstances, these people could be deemed to be employees, in which case these obligations will also extend to them. See the table below, which will help you be clear whether people working with you are employed or not.
FACTORS INDICATING AN EMPLOYMENT RELATIONSHIP
- The individual is obliged to make themselves available at the business’s request and the business is obliged to provide work to them.
- The business has control over the individual, the tasks they do, when and how they do them.
- The individual cannot work for anyone else unless the business permits.
- The arrangement is ongoing and does not relate to a specific task.
- The individual is part of the business performing services which are similar to employees, has a business email address and features on business stationary.
- The business provides equipment, tools and facilities for the individual to perform tasks.
- The individual is paid even if there is NO WORK for them to do.
- The business arranges the payment of the individual’s tax and national insurance.
FACTORS INDICATING A CONSULTING RELATIONSHIP
- The business is under no obligations to provide work and the individual is under no duty to accept any offered.
- The individual decides how and when they work and is not under direct supervision from the business.
- The arrangement is for a specific task or project and is clearly to end when that task or project completes.
- The individual is paid per task or commission only.
- The individual does not have a defined role within the business.
- The individual provides their own equipment and materials.
- The individual is responsible for any losses arising from their work.
- The individual is responsible for calculating and paying their own tax and NI contributions.
Once you have assessed that you have an employee, here are your duties to them:
- To provide a written statement of terms
- To pay the minimum wage, statutory holiday, sick and maternity pay
- To provide a safe place of work
- Not to discriminate them or treat them differently on the basis of their age, gender/gender reassignment or sexual orientation/marriage or civil partnership/pregnancy or maternity/race or religion/disability
- Not to unfairly dismiss them
- To pay statutory redundancy pay if they become redundant
If you are at all unclear as to worker’s rights it is worth consulting ACAS who can supply FREE further information on all of the above.
This group of people is essential to your business. Any problems with them and it can prove disastrous to your bottom line. As well having a great offering and good customer service, it is essential with this group of people to make clear your expectations of each other. Where you are providing a standard and repeatable product or service, it is a good idea to have written terms and conditions to try to make clear what the rules of engagement are. These should be bespoke and personal to you, though you can find online templates or “borrow” terms from a competitor and adapt them. It is important that terms are written in plain English and are easy to understand. They should cover all the practical arrangements between you such as:
- For how much
There is no real magic in drafting terms. Just record clearly what the intentions are and what the deal for your customer is. You can also limit your liability for things as long as it is “reasonable”, apart from your liability for causing death or personal injury. Any terms that do that would be ILLEGAL.
As well as having your own “rules” set out in your terms and conditions, you also need to be aware of the statutory legal requirements, which are rules imposed on you by law. Where your customers are consumers (B2C) rather than businesses (B2B) the rules are stricter.
In B2C environment the product supplied must be of:
Satisfactory quality = goods shouldn’t be faulty or damaged when a customer receives them. You should ask what a reasonable person would consider satisfactory for the goods in question. For example, bargain-bucket products won’t be held to as high standards as luxury goods.
Fit for purpose = goods should be fit for the purpose they are supplied for, as well as any specific purpose the customer made known to the retailer before they agreed to buy the goods.
As described = goods supplied must match any description given to a customer, or any models or samples shown to a customer at the time of purchase.
A customer has 30 days to reject a product if it fails to meet any of these requirements and be eligible for a full refund. This period is shorter where the goods are perishable and is relative to what is reasonable for that product. After this period of time the customer has to give a retailer one chance to repair or replace a faulty product. Within the first 6 months if a product becomes faulty it is presumed to have existed at the time it was supplied and therefore the customer does not have to prove the fault was there at the time they acquired it. After 6 months the presumption flips and a customer would have to prove the fault was there at the time of purchase, which normally involves an expert report.
- The trader must perform the service with reasonable care and skill.
- Information that is spoken or written is binding where the consumer relies on it.
- Where the price is not agreed beforehand, the service must be provided for a reasonable price.
- Unless a particular timescale for performing the service is set out or agreed, the service must be carried out in a reasonable time.
Consumers other rights are:
- The right to safety
To be protected from products or services that are hazardous to health and life
- The right to be informed
To be given facts about the products and services supplied and protected against dishonest or misleading advertising and labelling
- The right to choose
From a range of products and services at competitive prices
- The right to be heard
To have consumer rights addressed within government policy
- The right to redress
To have a fair settlement of claims
- The right to consumer education
To acquire knowledge and skills around their rights
- The right to a healthy environment
To live and work in an environment which is non- threatening to the well-being of future generations
- The right to satisfaction of basic needs
To have access to basic and essential goods and services
In B2B context the expectation is that parties are more generally free to negotiate their own terms given a relative equal bargaining strength. However there are still statutory minimums that need to be met and a “reasonableness” requirement that depends on various circumstantial elements. Again, it can be very useful to have standard terms and conditions. For further help with drafting terms and conditions that you can use regularly, we can provide a fixed price package. This will also include advice on how to implement a process to incorporate your terms into your customer relationships, as it is essential to get this right in order to rely on them.
OTHER THIRD PARTY RELATIONSHIPS e.g. suppliers
As with the other groups above, you should condense into writing the rules of engagement between you and any other third parties. Also be aware that other people may try to impose their terms on you. Check emails and purchase orders to see if they say anything around that and if they do, you should read them carefully and query any that don’t make sense to you. Also be aware that as well as what is written down, some things that are said orally can become legally binding. Because it is hard to judge whether verbal arrangements will be deemed contractual it is better not to rely on that and if there is something important then WRITE IT DOWN!