Category: Insights

Recruitment and Retention Strategies for SMEs

Posted on by Jay

How do you best recruit and then retain valuable employees? That is a vital question for all businesses as well as the private and public sector. One of the common themes of the current wave of strikes in the UK is not just rates of pay, but the impact on employees of inadequate recruitment, poor morale, burnout stress, and low retention of staff.

It seems obvious that rates of pay will do a lot to attract new candidates, especially given the pressures we all face in terms of higher energy bills and double-digit inflation, but while firms certainly must be competitive in terms of remuneration, the importance of associated benefits packages is also vital. Recent workforce surveys seem to suggest that important though salary levels are, cash isn’t the be all and end all for many good candidates. The cost-of-living crisis notwithstanding, remote working during the pandemic seems to have changed how people view compensation. Successful talent acquisition and retention now depends on several factors.

Businesses will need a more tailored, holistic, recruitment approach with consideration given to hiring for attitude as much as aptitude. Each team member’s growth, learning and development is an individual journey and one path may not fit all. Companies would be well served to fully understand the skills they need, listen to candidates, use technology when it helps, and nurture the good people they already have.  All this will make businesses attractive to the potential employees needed by the business for it to grow and develop.

Building Your Employer Brand

Branding is not just for your customer base but is also the way existing and prospective employees perceive you as an employer. Building your employer brand is crucial in telling prospective candidates what you have to offer them. Start thinking about what makes you different as an employer. What employee benefits do you offer? Do you host social events for employees? Do you offer career development opportunities and training? It is these kinds of things that attract candidates to your organisation, so make sure you mention them in job adverts. If you have a careers page on your website add a section on what it’s like to work with the firm, using quotes from existing staff or even a short video. Showcase your staff and culture on social media.

Reviewing the Recruitment Process

Even if you have an established employer brand, how does an SME decide between building their own internal recruitment department or using an external agency? There are pros and cons to each approach, but which route you choose depends upon which works best for your particular circumstances.

Managing Recruitment Internally

Managing recruitment and selection within your company does mean you have quality control over all the processes with a focus on your company, all of the time. After all, you will know your company better than any external party ever can. But unless you do the job yourself, establishing an internal team will cost money. If your processes are inefficient you may end up spending a lot of time – which costs even more money – but these costs can often be lower compared to agency fees. In addition, there will be no ongoing fees based on a percentage of salary.

An in-house team will also have full candidate access so you will see every candidate who applies, reducing the possibility of good candidates being dismissed too soon in the process. In-house recruiters are also employees, so they will understand the culture of your company, meaning they are more likely to hire individuals who will be a good fit with the existing team. They will have nothing to gain (financially or otherwise) by proposing specific candidates and are likelier to hire the best person for the job on merit.

Agency Recruitment

Agency recruiters are specialists whose expertise is greatly increased when you use an agency familiar with your industry or sector. Agencies come in many shapes and sizes, with a recent rise in new hybrid players offering ‘fixed fee recruitment’, ‘online recruitment’, and ‘outsourced recruitment’ options. Most will work for a set fee-per-hire, or for a retainer fee agreed at the start. Agencies can find you someone very quickly, so if the recruitment need is urgent, they can often get a suitable candidate from their existing network of contacts.

Agencies are usually better equipped to fill niche roles. Part of the agency process is to screen or ‘qualify’ potential candidates, which is very time consuming. This saves you time and effort, meaning you can focus on the ‘day job’ without the extra commitment of having to run a recruitment campaign.

The recruitment agency will of course be highly motivated to fill your role because success for them means financial gain, but this doesn’t necessarily guarantee a quality placement.

One of the most important lessons however is that all contracts are negotiable. Do not feel that you must agree to an agency’s Ts & Cs. Their Ts & Cs tend to be extremely one sided (benefitting them), but Motion Paradox’s lawyers have a great deal of experience of renegotiating contracts, including with employment agencies. Feel free to contact us to see how we can help you.

Automated systems can also reduce the cost and time constraints of traditional recruitment, but there are risks in hiring ‘straight off the web page’ without an in-person interview.

Look at Skill Sets Instead of Job Titles

Whatever approach to recruitment is adopted, good advice is to hire the best talent you can, even if that does not necessarily fit a specific positional need. Recruiters describe a candidate with precisely the right range of qualifications that perfectly fits a job as a ‘purple squirrel’ (i.e. not that easy to find!). Over-specification of the requirements for your ‘perfect candidate’ can also be limiting and damaging. Excellent candidates may not be an exact fit, but are likely to be flexible, self-motivated, and determined. They will have an aptitude and desire to learn new things and are likely to be real team players. Assessing all these attributes is much easier face-to-face, which is time consuming, but looking a candidate in the eye is still the best way to assess how good a fit they will be. Thought will also have to be given to onboarding processes which make sure new hires are embedded effectively, so they can become productive more quickly.

Retaining Good Employees

Once you have found your ideal employee, how do you make them want to stick around? Obviously, for employees to make a long-term commitment to your firm, the employer will need to give them good reasons above and beyond simple remuneration. Showing your employees trust by giving them responsibilities that allow them to grow and gain new skills will help. Hiring from within wherever possible and giving generous promotions at appropriate times also builds morale and commitment.

Linking part of the wage to company performance through profit share or similar mechanisms will align your people’s interests with the company’s goals and provide an incentive to stay with the firm as it grows. Making the fixed cost of payroll inherently more variable also means you can make your company more resilient and agile. Any rewards you give your employees should speak to their emotional or domestic needs and should go beyond monetary compensation. Be generous with time off, because while you have every right to demand commitment and high-quality work, it is unreasonable to expect that continual level of performance 100 percent of the time.

The Exit Interview

If, despite all these steps, your staff retention rate is low and turnover high you can learn a lot from conducting thorough exit interviews. What attracted the employee to your organisation, and why are they leaving? Sometimes owner/founders of SMEs or managers don’t always see the workplace dynamics, especially if they’re in meetings or unavailable a lot of the time. Exit interviews can give an insight into the working culture and whether there is anything you can do to improve it. The exit interview will also give valuable information about external factors that may be pushing employees out the door, such as competitors offering better pay or better compensation overall. Perhaps not what you’d want to hear, but constructive criticism is one way to learn, grow, and retain staff.

Talk to the experts here at Motion Paradox about recruitment and retention. We’ve been where you are. We can give you advice based on our own experience of precisely the same issues you now face!

The Impact of Brexit on SMEs Becomes Clearer

Posted on by Jay

Even with factors such as the pandemic lockdowns, the September “mini-budget” and the measures announced in the Autumn Statement on 17 November, the impact of Brexit, especially on SMEs, is becoming clearer.

Most recently, Michael Saunders, an external member of the Bank of England’s Monetary Policy Committee, who left that position this month, felt free to comment on Bloomberg TV:

“The UK economy as a whole has been permanently damaged by Brexit”.

Former UK government Environment Secretary, George Eustice, now a back bench MP, similarly felt free to suggest that the much-vaunted Australia trade deal is not actually a very good one for the UK, increasing UK GDP by a mere 0.02% annually, and even then, only after 15 years.

The Big Brexit (a report published in June 2022 jointly by The Resolution Foundation and the London School of Economics) gave an ongoing assessment of the impact of the UK’s Trade and Cooperation Agreement (TCA) with the European Union (EU) and what the lasting impact of Brexit is likely to be.

The report suggests that Brexit has not had the expected effect of diminishing exports to the EU, but instead has more broadly reduced the openness and competitiveness of Britain’s economy – a decline not explained by changes in the pattern of global trade or the pandemic. The report cites a fall of eight percentage points in UK trade openness (total trade as a share of GDP) and also notes that the UK lost market share across three of its largest non-EU goods import markets in 2021: namely the US, Canada and Japan.

The authors of the report suggest that, while the overall structure of the economy will not change, some sectors will suffer – one of the worst hit being the manufacture of electrical equipment, which is particularly reliant on cross-border supply chains. They conclude that, while many believed the impact of Brexit would be a “one-off shock”, the reality is that, even without the current dire condition of an economy facing a lengthy recession, the fallout from the decision to leave the EU will be gradual and pervasive, affecting Britain’s competitiveness and productivity for at least the coming decade.

Immediate Brexit Challenges for SMEs

Some larger businesses are able to claim financial support when it comes to exporting from the UK. UK Export Finance, the UK government’s export credit agency, is currently lending its highest amount of credit in 30 years.

The government set up an SME fund offering various grants, however, applications for this scheme ended on 12 July 2021. There are lots of complex rules that businesses now need to come to terms with, many involving hidden costs, so getting the right advice and planning ahead is vital. There are some immediate Brexit-related issues that SMEs could and should address immediately.

Right to Work Checks

The adjustment and streamlining of Right to Work checks introduced in March 2020 in response to the coronavirus pandemic ended on 30 September 2022. So, as from 1 October 2022 employers either have to conduct their Right to Work checks in person or implement suitable, compliant processes through an IDSP (Identity Service Provider). The type of check you must now conduct will depend on a number of factors, such as the nationality of the worker, but you cannot dictate how an individual proves their eligibility to work in the UK.

Any Right to Work processes you have in place must be compliant and implemented consistently and correctly, otherwise Home Office enforcement action can be taken against your organisation. You can find more information at https://www.gov.uk/check-job-applicant-right-to-work and https://www.gov.uk/guidance/employing-eu-citizens-in-the-uk

Employing EU Nationals

Since 1 January 2021, companies have been required to have a sponsor licence to hire EU nationals. This is an issue for many businesses, especially the hospitality sector, which suffered during the pandemic despite extensive government support. Trade group UK Hospitality squarely blames Brexit for these problems. Potential recruits must now meet a specific set of requirements for which they gain points. Visas are then awarded to those with enough points. Businesses who need to hire EU nationals (or employees from outside the UK in general) should understand the responsibilities and steps they should follow and consider reviewing recruitment processes to ensure compliance with the new rules. You can find more information at https://www.gov.uk/guidance/recruiting-people-from-outside-the-uk.

Intellectual Property/Trade Marks

Before Brexit, you could apply for an EU trade mark which would also cover and protect you in the UK and this meant that you did not necessarily need to have both an EU trade mark and a separate UK trade mark. The Intellectual Property Office (IPO) has created a comparable UK trade mark for all rights holders with an existing EU trade mark. You can check that the IPO has created the comparable trade mark at: https://www.gov.uk/search-for-trademark. More information about trade marks can be found on the government website.

Domain Names

Those whose businesses are exclusively on-line should note that, since 1 January 2021, you are not able to register or renew .eu domain names if your organisation, business is established in the UK but not in the EU/European Economic Area (EEA) or you live outside of the EU/EEA and are not an EU/EEA citizen. If you already have a .eu domain or are considering obtaining one, you should check the eligibility criteria set out in Article 4(2)(b) of Regulation (EC) No 733/2002, as amended by Regulation (EU) 2019/517, and seek legal advice if necessary. You can find more information about domain names at https://www.gov.uk/guidance/registering-and-renewing-eu-domain-names-in-the-uk.

UK Employees Working Abroad

Since 1 January 2021, any UK employee who goes to work in an EU country will need a work permit and, in most cases, a job offer from the chosen country to get a visa to move there. Criteria for obtaining a visa may differ between EU member states, so it is important that you talk with a UK-based embassy of the country you want to work in to see what the procedure may be. You can find more information on this at https://www.gov.uk/working-abroad.

Brexit Guidance

More information about how new Brexit rules apply to things like travel and doing business with Europe can be found at https://www.gov.uk/transition, but should you have any questions or queries please do not hesitate to reach out to us. The Motion Paradox team are here to help.

Doing Business in the UK

Posted on by Jay

For many US companies looking for international growth, the United Kingdom is an attractive first foothold in overseas markets. A government keen to attract inward investment, a shared business and civil culture and the English language as well as geographic (if not political) proximity to mainland Europe all make the UK a logical choice for a base for overseas expansion.

You’ll need to understand the British legal and commercial environment, which does differ from the USA in several important respects. It’s also important to understand that the United Kingdom actually comprises four separate nations: England, Wales, Scotland, and Northern Ireland. England and Wales can still be thought of as a single legal jurisdiction, while Scotland and Northern Ireland each have their own clear separate legal systems. The Channel Islands and the Isle of Man are not technically considered to be part of the UK and they too have their own systems. In this article, our advice generally applies to England and Wales, unless otherwise stated.

Setting up in the UK

There are several issues to consider when deciding how you will enter the UK market, not least of which is, given the increase in home/remote working, do you even need a physical presence there? For most companies, ‘boots on the ground’ are essential, so deciding what company structure should be, depending on the size and permanency of your planned UK operation, is the start point.

Joint ventures or distributorship arrangements can be attractive. Operating a branch would be another option, but this is not a separate legal entity. The overseas parent company would be directly responsible for the operations, liabilities, and obligations of its UK establishment. Buying an existing UK company may not be an attractive financial option. For most US companies aiming to do business in the UK, setting up a subsidiary is probably the best option. A UK subsidiary company is a separate legal entity, distinct from its shareholders and directors, which can enter into contracts directly. This status also offers the US parent some protection from the subsidiary’s liabilities.

Incorporating a private company limited by shares is a straightforward process and Motion Paradox experts can help with completing the required forms and filing with the Registrar of Companies. A UK private company will also require articles of association (which govern the company’s administration) and can have just one director, who need not be a UK national. There must be an official UK address (the ‘registered office’). If you’re based or operating in England, the registered office must be in England. If in Wales, the registered office address must be in Wales.

A UK private company does not need to have a company secretary, but it pays to consider appointing one as company secretaries must ensure compliance with all statutory filing and reporting requirements. This too is a role where Motion Paradox can help.

Intellectual Property Issues

Protecting the integrity of the brand you have worked hard to establish and other intellectual property (IP) implications are the most frequent issues US businesses, who are thinking about expansion overseas, ask the Motion Paradox team to consider. Understanding the impact of the UK leaving the EU (Brexit) and how this affects the range of IP rights available to you is equally important. Before entering the UK market, it’s advisable to audit your IP to identify any areas that could not only be bolstered by additional protection but also how these valuable assets could be used to attract investment or perhaps licensed to provide an active revenue stream.

Copyright

The main types of IP rights in the UK includes copyright, which protects original works against copying, sharing, selling, renting, or lending. Copyright in the UK is automatic. There is no need to register and the protection usually lasts 70 years from the death of the author. The UK courts will enforce the vast majority of foreign copyrights, provided they meet certain criteria in the jurisdiction where they were created. There are also a number of international laws dealing with copyright and the USA participates in a range of them. Materials created by nationals of one signatory country will automatically be protected in all signatory countries according to their national laws.

Trademarks

Trademarks (words, names, images, sounds, slogans, and logos) can be registered in the UK and can be renewed indefinitely (subject to renewal fees). It is possible to rely on unregistered trademark protection in the UK, known as “passing off”, however this not as strong as registered trademark protection which is usually the better option in all circumstances. Since Brexit there have been changes to the registered trademark system across the UK and the EU. If trademark protection is required, two separate applications will need to be made to the UK Intellectual Property Office (UKIPO) and to the EU Intellectual Property Office (EUIPO). These separate applications involve different forms and attract different fees and costs.

Designs

It is possible to register designs in the whole of the UK, protecting the overall visual appearance of a product or part of a product. Registration with the Intellectual Property Office is required and can last 25 years (subject to payment of renewal fees). You can protect the texture, color, shape, or material and that protection is not limited to the product to which it was originally applied. Brexit has resulted in a number of changes to registered design rights. If registered design right protection is needed in the UK and the EU, then separate applications will need to be made, or an international registration that designates both the UK and the EU could be filed under the Hague Agreement.

Contracts, Compliance, and Data Protection

Companies dealing with other businesses in the UK are free to agree the terms of their trading contracts as they think fit. However, consumers have greater protections by UK law than in the US. It’s important to ensure any trading contracts with consumers comply with these legal requirements, which extend to all advertising, marketing, and sales promotions as well as rights concerning defective goods and services. To ensure contract terms are enforceable, it is important to review your standard form contract documentation before doing business in the UK.

There are a number of other important general compliance issues any UK company must satisfy concerning data protection and privacy. All providers have to comply with these data protection rules, including the General Data Protection Regulation (GDPR), which is one of the toughest privacy and security laws in the world. Everyone responsible for using personal data has to follow strict data protection principles, especially if your company participates in the UK’s ‘Open Banking’ initiative, instigated in 2017 by the Competition and Markets Authority (CMA) following its market investigation into retail banking.

Of particular importance for any firm in the financial services sector is compliance with regulations concerning ‘operational resilience’, defined by the regulators (Bank of England, Prudential Regulation Authority and Financial Conduct Authority) as the ability to prevent, adapt, respond to, recover, and learn from operational disruption.

Taxation

HM Revenue & Customs (HMRC) is the taxation authority in the UK responsible for the administration and collection of all UK taxes, including value added tax and customs and excise duties. Responsibility for the administration and collection of taxes is devolved thru the Scottish Parliament and the Welsh Assembly to Revenue Scotland and the Welsh Revenue Authority.
UK companies must pay corporation tax based on their taxable profits in an accounting period, generally paid within nine months and one day following the end of that accounting period. For larger companies (with profits of at least £1.5m), corporation tax is due in quarterly installments.

Value Added Tax (VAT) is charged on the supply of goods and services made in the UK. Registration for VAT is compulsory where a company’s taxable supplies for the preceding year exceed the threshold (at the time of writing VAT has been frozen at £85,000 per year until 31 March 2024) or it is likely that its taxable supplies in the next month alone will exceed that threshold. The general rule is that all supplies of goods and services are subject to VAT at the standard rate (currently 20%) unless they are exempt or subject to VAT at a lower rate.

There are however a number of tax incentives to doing business in the UK as well as significant reliefs for qualifying spending on research and development for example. Motion Paradox work with a number of tax specialists and this team can assist you thru the UK tax regime.

Employment Differences

Generally speaking, UK employee rights are stronger than in the USA. The law imposes certain minimum requirements, such as the national minimum wage which is higher than the federal minimum wage of the USA but lower than the minimum wage set by some US states. Women are legally entitled to be paid the same as men doing work of equal value (and vice versa). A UK employer also has a duty to make reasonable adjustments to help disabled employees overcome the disadvantage caused by their disability in the workplace.

All employees and workers are entitled to receive a written statement of specific terms and conditions of employment on or before the date their employment commences. This statement or contract of employment must contain some key terms such as the name of the employer, employee job title, rate of pay, hours of work, disciplinary and grievance procedure, holiday entitlement, and notice periods.

Employees are also legally protected against discrimination, harassment, and victimization on the grounds of age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, gender, and sexual orientation. Discrimination can be claimed at any stage of the employment process and if an employee’s case for discrimination is successful, the employer can be ordered to pay unlimited compensation. US companies should therefore be aware of the rights of UK workers before they commit to opening up operations.

Helping you do Business in the UK

Our team at Motion Paradox can help you do business in the UK, which remains one of the easiest countries in which to conduct business. The World Bank Group regularly ranks it as the eighth most business-friendly country in the world from a regulatory and legal standpoint. London is one of the world’s financial and investment centers while the nations and regions of the UK offer a highly skilled workforce with labor laws that are more flexible than many other European countries. For any ambitious North American company, the UK is an ideal market of some 67 million people with easy geographical access to the rest of Europe and the convenience of an English-speaking country.

Carry on Carrying over Holiday Entitlement?

Posted on by Jay

What should be your approach to carrying over holiday entitlement now, as we seem to be emerging from the worst of the pandemic? How should employers handle leave ‘carry over’ requests from their workers when what was a public health emergency is being replaced by the prospect of much tougher financial circumstances. A trading environment that may require ‘all hands to the pump’ for longer than usual as much as Covid ever did?

Maintaining (or better yet improving) productivity while ensuring that your workforce is committed and content and keeping within the law will require sound professional advice and good judgement for many businesses. It could be a matter of survival for many smaller companies.

The old rules on the ‘carry over’ of annual leave

The Working Time Regulations 1998 set out that all workers (including employees) are entitled to a minimum of 5.6 weeks of paid annual leave. Under the law of England and Wales (other jurisdictions may differ) employers are obliged to allow their workers to take leave within each ‘leave year’, unless they could not do so because of sickness or statutory leave such as maternity leave. In those circumstances, leave was to be carried over to the next leave year. The 2018 Supreme Court Pimlico Plumbers judgement also confirmed that the same holiday entitlement and pay rights apply to those supposedly ‘self-employed’ in the gig economy who are legally ‘workers’.

Rule changes in response to Covid-19

In March 2020, the government passed emergency legislation aimed at allowing businesses the flexibility to respond to the pandemic while also safeguarding statutory holiday entitlement rights. The Working Time (Coronavirus)(Amendment) Regulations 2020 allowed workers to carry holiday forward because it was not ‘reasonably practicable’ to take it in the leave year to which it related due to Covid. In those circumstances, the untaken amount of leave could be carried forward into the following two leave years.

This would apply to employees who were ill, self-isolating or were ‘frontline’ staff or key workers asked to continue working, but workers who cancelled holidays because of travel restrictions would not covered by the amended regulations – they could still have taken a break from work.

What are the rules now?

It seems logical for employers to assume that, since the maximum carry over provision in the March 2020 legislation was two years, these emergency Covid-inspired rules ceased to apply in March 2022, but that is not the case. There was no ‘expiry date’ given in the amended regulations. The right to carry over leave for two years appears to be ongoing, at least until Covid is considered not to be a critical public health issue or the amended 2020 regulations are repealed.

Handling carry over requests

Provided it is not going to seriously damage your business, it is probably best to accommodate requests for carry over leave whenever possible – if not all, then at least part of any accrued leave – as a gesture of goodwill to acknowledge the efforts of your people.

Such a move could help to boost staff morale, delivering an even more committed workforce for the future. West Lothian Council in Scotland has done just that by giving all council employees an extra day’s holiday as a ‘thank you’ for their efforts during the pandemic, describing the extra day as ‘recognition leave’.

Precisely when any carry over leave should be taken is also a matter for agreement within the company, as the amended regulations do not specify how and when carried over leave must be taken. Government guidance merely suggests that best practice is to give employees the opportunity to take it at the earliest opportunity – i.e. in the first year after the holiday has been carried over – if practicable.

Business critical considerations

If the absence of key workers at key times would damage your business, then the March 2020 amendment to the regulations means that employers can still tell workers when they would prefer them take their holiday. At least twice as many days’ notice as the length of the workers’ proposed holiday would have to be given, but this requirement can be waived if the worker and the employer agree.

The current regulations also give employers the right to ask workers to cancel carried over leave but only if there is a ‘good reason to do so.’ Some businesses may be tempted to encourage employees not to carry forward leave by ‘buying it out’ but an employer remains legal obliged to facilitate their employee taking annual leave and cannot replace it with a ‘payment in lieu’.

Carry over leave may also impact some aspects of your business more than others, so the temptation might be to treat requests from different departments differently. However, if you have an all-female team in one department for example, you could face a discrimination claim on gender grounds if you refuse carry over which is permitted elsewhere in the business. If you must apply different approaches to different teams, it is important to be clear on the rationale and document it, but it is always preferable to apply a consistent approach across the whole firm if you can.

Motion Paradox experts can advise about approaches to keep your business on track and your workforce on board. More general information about holiday entitlement can be found at https://www.gov.uk/holiday-entitlement-rights while the Advisory, Conciliation and Arbitration Service (Acas) can give employers free impartial advice on workplace rights, rules and best practice.

Learn more about how a human resources audit by Motion Paradox can uncover any potential issues that exist within your company’s HR policies and practices.

Co-Founders: What Happens When It Goes Wrong

Posted on by Jay

Every co-founder situation is different, but one common problem, especially in start-ups, is how to handle co-founder disputes which can damage progress or even lead to company failure. The problem isn’t unique, even though it may feel that way to the individuals involved in conflict.

Harvard Business School professor Noam Wasserman writes in his book “The Founder’s Dilemma” that 65% of high-potential firms fail due to disputes among co-founders. At Motion Paradox, that has been our experience too. Many of our clients come to us because of this issue. They stay because they recognise we help with other problems.

A co-founder is more than just a business partner. They’re someone with whom you plan to cultivate a long-term relationship, but, as with any relationship, that partnership may not work out. There could be a straightforward personality clash, or business goals might no longer be in sync or questions might arise about commitment to the business. It’s another aspect of the ‘motion paradox’ that many businesses, especially start-ups, face.

Real World Consequences

When a dispute becomes serious, there could be longer term implications for any business. For example, Zipcar is an American car-sharing company offering vehicles billable by the minute, hour, or day for a fixed membership fee. Now a subsidiary of Avis Budget Group, long before Zipcar became a hugely successful business, without seeking professional help, founder Robin Chase entered a 50/50 equity split with her co-founder Antje Danielson.

When their relationship soured shortly after they went into business, Chase and her co-founder parted company, but Danielsen still retained half of the company she was no longer helping to build. Apparent success will also temporarily mask co-founder problems. Things might be going wrong underneath and you won’t be aware of it. When a co-founder dispute becomes so serious that it’s damaging the business, it can be extremely difficult to see any good options.

Plan to Prevent Problems

The first approach to avoid these problems is to focus on preventing conflict, rather than trying to fix it when a lot of the mental, emotional and financial damage has already been done. It can be useful for both parties to document what each expects from the setup, but the most positive step you can take is to be open to early professional advice, recognising that disputes and disagreements are inevitable, in the early days of the business and throughout its lifetime. Getting professional advice early on can identify actionable, practical solutions to put, and keep, the business on track.

Motion Paradox experts can advise about implementing strategies to avoid destructive conflict, because we believe differences of opinion can be constructive. As soon as the company is regularly engaging in commercial activities, we can suggest the processes and create the documentation, such as a shareholders’ agreement, that will provide the mechanisms for dealing with and resolving any disputes.

Typically, a shareholders’ agreement specifies how equity will be shared, IP ownership, pre-emption on issues of new shares/transfers of existing shares, restrictive covenant obligations, what happens to the equity if a co-founder quits, a structure for how decisions will be made (including board appointments) and deadlock provisions.

Dealing With Problems

Even if all these steps to prevent damaging disputes are taken (and certainly if they are not) problems that are seemingly irreconcilable may arise. One useful strategy in these circumstances is to use an independent third-party to mediate your dispute and suggest a resolution. This works of course if both parties are prepared to abide by whatever conclusion the neutral mediator may suggest.

Smoothing Co-Founder Exit

If none of these preventative measures and approaches work and mediation proves impossible, the business will have to face up to the fact that one person needs to exit. There are a number of reasons why a co-founder might leave your business and it is certainly not an uncommon event in the start-up world. Despite your best efforts, if things have reached this stage, then it is usually more beneficial in the long term to simply end the relationship than to try and convince your co-founder to stay on.

Motion Paradox can help smooth the exit of a co-founder, by negotiating on behalf of the company to ensure the relationship is terminated fairly, with full transparency, and as little damage to the business as possible. Getting professionals involved in this final act will also avoid mistakes and potential legal problems in the future.

Professional Advice for Every Eventuality

A co-founder leaving your start-up can feel like a big loss, but it certainly does not have to mean the end of your journey. Every team experiences disagreement at some point. If it doesn’t, chances are destructive conflict is brewing beneath the surface and may erupt at the worst time possible.

Motion Paradox can advise on how to prevent these disagreements from becoming toxic and implement processes to manage disputes when they arise. We can help mediate disputes to achieve a positive resolution, but if that proves impossible, we can help mitigate the impact of a co-founder exit.

But things don’t have to be this dire before you consider getting our professional help on board. Athletes have coaches and trainers who help them get to peak performance. Motion Paradox can do the same to help tune up your business.

Digitalisation: The Right (to Work and Rent) Solution?

Posted on by Jay

UK employers have a legal obligation to comply with the prevention of illegal working legislation as set out set out in the Immigration, Asylum and Nationality Act 2006, section 24B of the Immigration Act 1971 and Schedule 6 of the Immigration Act 2016. This legislation requires checks to verify that anyone you employ in the UK has the legal right to perform that work. Landlords have to jump through similar hoops when it comes to establishing the Right to Rent – but more on them later.

Stiff Penalties for Non-Compliance

Employers may be liable for a civil penalty if they employ someone who does not have the right to undertake the offered work on or after 29 February 2008. That was a lesson embarrassingly learned by former chief law officer Baroness Scotland in 2010 when it turned out she had hired an illegal immigrant as her cleaner. The cleaner, Loloahi Tapui, was jailed for a total of eight months and Baroness Scotland was fined £5,000 for failing to take copies of the documents Tapui claimed to show she was entitled to work in the UK.

That’s why conducting Right to Work checks correctly is important, not least because it offers you a defence in the event of problems with the immigration or working status of any of your employees. Equally vital though is carrying out these checks on all prospective employees, regardless of nationality, race, or ethnicity. Singling out certain classes of individual could lead to charges of unlawful discrimination by an employee.

Employers have had two ways to conduct checks on a job candidate’s Right to Work: inspecting their physical ID documents in a manual check or looking the candidate up on the Home Office UK Visas & Immigration department (UKVI) UKVI immigration database online.

Digitalisation of Right to Work Checks

Complete digitalisation has been a long-term goal for the UKVI and its ambition is to do away with physical immigration documents entirely by the end of 2024. Checking an individual’s Right to Work using the temporary COVID-19 adjusted measures has proved popular, especially given the practical difficulties in checking new employee’s status when so many people were working from home. So popular in fact that the UKVI announced in June 2021 that, due to positive feedback, they intended to introduce a new digital solution to allow more types of status to be checked online. This includes UK and Irish citizens whose status cannot be confirmed using the current UKVI online checking service.

Changes to the System in April

From 06 April 2022 onwards employers will no longer be permitted to accept some physical documents as evidence of right to work. This includes Biometric Residence Permits (BRP), Biometric Residence Cards issued to family members of EEA migrants under the EU Settlement Scheme and Frontier Worker Permits for EEA migrants. Employers will instead be expected to use the free UKVI online checking tool. Employers will not need to do retrospective checks on anyone employed on or before 05 April 2022 if those checks were made using a physical document, although follow-up checks will still be required where someone has limited permission to stay in the UK.

Government guidance announced on 17 January 2022 stated that, from 06 April 2022, the government intended to work with Identification Document Validation Technology (IDVT) service providers to carry out checks on people outside the scope of UKVI’s own online checking service.

From that same April date employers can only use certified Identity Service Providers (IDSPs) to carry out digital Right to Work checks on British and Irish citizens – as long as they hold a valid passport. It’s thought that the cost could be as much as £70 per check, unlikely to be welcomed by businesses already dealing with National Insurance hikes and rising inflation.

The Employer Remains Liable

While the digital Right to Work checks are to be completed by IDSPs on behalf of employers, no IDSPs have been identified yet (it is expected that a list of certified IDSPs will be published by the Department for Digital, Culture, Media & Sport ‘shortly’). However, even though it’s someone else doing the check, the legal obligations around prevention of illegal working still falls on the employer.

Employers will still have a responsibility to carry out a risk assessment on every transaction and remain liable for undertaking their own due diligence, so examination of how your current Right to Work processes fit with this proposed digitalisation is crucial.

Limitations of the System

This digitalised service is expected to save time and bring efficiency, although the actual cost of using the system is unclear. And while digitalisation of the system appears to be a positive step, especially in a post-pandemic world, many suspect that in fact it represents the beginning of the privatisation of the UK’s immigration system. Those without broadband access or passports will be at a disadvantage, as will many candidates who may lack any physical documents (like those in the Windrush scandal).

Discussions are taking place to allow IDSPs to provide Right to Work checking services through alternative routes for those without passports or reliable on-line access. A problem here is that the people in most need of assistance (say those moving from welfare to work) are least likely to have any of the suggested documents, tax, NI records, or credit histories proposed.

The Right to Rent

Since 2015, landlords have been required to check that all prospective tenants have lawful immigration status in the UK before entering a residential tenancy in England, otherwise they may be liable for a severe civil penalty. Landlords can delegate this responsibility, along with maintaining records and conducting follow up checks to a letting agent.

The government claims that changing to digital identity checking in April means landlords can assure prospective tenants’ identities and eligibility. Biometric Residence Card (BRC), Biometric Residence Permit (BRP) and Frontier Worker Permit (FWP) holders will only be able to prove their right to rent using the Home Office online service. As with the Right to Work, from that April date physical documents will no longer be accepted as valid proof of Right to Rent. Landlords will not need to retrospectively check the status of BRC, BRP, or FWP holders who entered into a tenancy agreement up to and including 05 April 2022 and will not face any civil penalty if the initial checks were undertaken in line with the guidance that applied at the time the check was made.

Want to Know More?

Employers and landlords can get more information and guidance on the changes to Right to Work and Right to Rent checks by emailing RighttoRentandRighttoWork@homeoffice.gov.uk or by talking with the experts here at Motion Paradox.

The False Economy of Part-Time Employees and Contractors

Posted on by motionparadox

If you own or manage a business, getting the right people and building the right team is vital to your success, especially when the Coronavirus pandemic has had a huge impact on ways of working. Thousands of workers have transitioned from onsite employees to full-time remote workers and it’s clear that this shift in expectations about working patterns is here to stay.

In this era of hybrid working as the norm, hiring the best talent is not now simply a question of remote versus in-office workers, but also part-time versus full-time employees or independent contractors. Choosing between employees (full or part-time) and contractors, or a mixture of all three has pros and cons and in some cases the seemingly obvious choice could well prove to be a false economy.

Hiring Part-Time Employees

Part-time employees do offer cost savings over full-time employees for an employer in terms of proportionately lower rates of benefits, sick leave and pension contributions that have to be paid. Part-time employees allow you to staff exactly according to your company’s needs and market conditions and they can also fill in for full-time employees taking sick or maternity leave or work in after-hours technical support or night and weekend hours.

You can bring on staff with the expertise you need, when you need it and part company when that need is no longer there. You can recruit part-timers from a much broader, usually more reliable and mature, talent pool such as women re-entering the workforce, or those who are newly retired but not quite ready to stop work altogether.

However, you will still have to go through the same lengthy recruitment process for part-time positions as you would for full-time roles and there’s always the risk that part-time workers won’t be as committed or loyal to your company as their full-time co-workers. Part-time employees will have less time to invest in learning the ethos of your company and because they aren’t around as much as full-time employees, it could be difficult to integrate them into a coherent and effective team. Because they work less hours, part-timers are less likely to be intimately familiar with the task at hand and the quality of their work, as well as their productivity, can suffer.

If you are thinking of adding part-time employees to your workforce, you can manage the downsides by giving part-timers work that’s engaging and clearly communicating your expectations for full-time and part-time employees working as a team, scheduling meetings or social events at times convenient for both. You could develop strategies for handing off incomplete tasks to other employees and invest in additional training to shore up part-timers’ company knowledge.

But if all that sounds like too great an investment of your time, effort and resources on what could well be a limited duration project or need, it could make sense to hire a contractor instead.

Hiring Independent Contractors

Contractors aren’t your employees. They are one-person businesses who work for organisations usually for a defined period of time. If your business needs someone with specific skills which your firm lacks for a short-term project, hiring a contractor (often also referred to as freelancers) could be a cost saving solution. There’s no need to provide company benefits, holiday pay, sick pay or pension or superannuation payments to contractors and the employer’s legal liability is also reduced.

For many employers, the cost of a contractor is secondary to the quick access to what could be business critical skills which your current workforce lacks or would prove more costly to train up in house. Unlike employees of whatever status, when you hire an independent contractor, you can end the contract without any apparent reason with just a few weeks’ notice.

Some business owners see full-time employees as consistently more costly than independent contractors. It is true that having employees on your books means that you will need to do all the HR work or hire an HR specialist. Contractors will not require that kind of support, but they will charge more per hour as they have to self-fund their own benefits, tax, legal liability and overheads.

Contractors might therefore actually cost more and inevitably will have less loyalty to the firm than employees. They are not solely dedicated to you and might book other future work just when you need them most. It’s true that contractors can help your business through periods of growth or difficulty, but investing in employees, having people on board you can trust to develop the business with you because your interests coincide, is often a better long-term strategy than spending a lot of money on contractors.

Legal Issues Around Employment Status

Anyone hiring contractors, freelancers or consultants rather than employees needs to understand the legal view on their respective employment status as incorrectly classifying a worker can lead to penalties or fines. Employees and independent contractors are treated differently for tax purposes. In fact, even if a worker is not an ‘employee’ for employment law purposes, they may still be an ‘employee’ for tax purposes. So how can you decide if someone is an employee? UK law considers there to be three essential requirements for a contract of employment to exist:

  • Control – if the employer has ultimate control because, for example, they can discipline the worker, then it is likely that the person is considered an employee.
  • Mutuality of obligation – if the worker is obliged to do any work they are given and the party giving them the work is obliged to pay for it they are considered an employee.
  • Personal obligation – if there is a requirement to do the work personally then the worker may be considered to be an employee.

For there to be a contract of employment all of the above requirements need to apply.

Definition of an Independent Contractor

A worker would be considered an independent contractor in law if, for example, they had the final say in how their business is run, provided their own equipment and were free to work for others while working for you. HMRC has developed guidance on when it considers an employment relationship exists. It has also developed an online tool called the ‘check employment status for tax’ tool.

For employers and company owners, determining whether a contractor they take on board is an employee or is providing services through a Personal Service Company (PSC) became even more important on 6 April 2021, when new IR35 tax rules were introduced.

The term Personal Service Company was coined by HMRC alongside the introduction of IR35 legislation and is usually taken to mean a limited company that has a sole director who owns most, if not all, of the shares. Changes to IR35 now make the end-client liable for determining the tax status of contractors who work through a Personal Service Company and the rules require that employment taxes and National Insurance contributions are paid by the end-client business with which the contractor engaged directly.

Contractors Aren’t Suitable for Every Role

Making the right choice between full time employees, part time employees and contractors will depend upon your business circumstances and plans for the future. Understanding the different business needs and the suitability of an independent contractor versus a full-time employee can be complex. It is often tempting to turn to a contractor because the thought of going through the advertising, interviewing and on-boarding process is daunting. But there are situations where hiring a contractor could be the wrong decision, especially if you are trying to build a team for the future.

The most important thing to remember is that a contractor is not an employee. Contractors are independent businesses working for you, sometimes on your premises. If you treat them as employees you run the risk of losing money through having to pay unnecessary IR35 taxes. Getting sound business and legal advice before you consider who you should hire and in what capacity will not only take some of the burden of finding the right people with the right skills off your shoulders but will also safeguard your business from potential penalties and ensure you are getting the best possible value for money out of every hire.

Hybrid and Remote Working in a Post-Covid World

Posted on by motionparadox

Most commentators seem to agree that remote working in some form or other introduced as a result of the pandemic is here to stay. A wide range of research confirms that most workers want to continue to work from home, some all the time but most it seems would prefer a balance where they are in the office for some of the week and at home for the rest. This is so called “hybrid working” or “blended working”.

The hybrid working model does have benefits for both employer and employee but can also bring frustrations and disadvantages. Hybrid working demands that employers trust their employees and that goes hand in hand with a change in managerial attitude and a redefinition of the measurement of performance. Indeed, contrary to many employers’ initial fears, remote or home working has in many cases resulted in increased productivity. Employees are judged on results and trusted to achieve their objectives.

However, it’s equally true that hybrid working arrangements may not be for everyone. Some people thrive in an office. Some need structure or a more social environment. Some industries just aren’t suited to hybrid working. There’s also a risk that hybrid teams will lose the cohesion and camaraderie that comes with face-to-face working.

Despite these potential downsides, surveys consistently show up to 77% of those asked were in favour of making some form of remote working a greater part of normal business life. However, hybrid working means different things for different organisations and careful thought and planning needs to be in place for these new ways of working to be accepted by the employees and to be effective.

Hybrid Working Arrangements Are Here to Stay

It’s now generally accepted that some form of flexible working that permits employees to split their working week between the office and another venue, usually their home, will have advantages for both the employee and the employer. For the employee, better work–life balance, greater ability to focus with fewer distractions, more time for family and friends, saved commuting time and costs are some of the more obvious advantages of a hybrid work regime.

Equally hybrid working means organisations and firms can reduce estate and facilities costs (although investment in IT may need to be increased) whilst retaining or even increasing productivity and retaining talent (if you don’t offer the hybrid working arrangements your employees seek, your competitors will).

The Importance of Having a Policy

A clear policy setting out when attendance in the office is required avoids the presumption that the homeworking arrangements adopted during the pandemic will be continued indefinitely. If you do simply allow permanent homeworking to continue this could give rise to an implied contractual right to permanent homeworking through custom and practice.

Key Elements of the Policy

Some of the key issues to include in a hybrid working policy include the question of eligibility – is the policy going to be applicable to all staff or is it is only suited to certain roles. If it will apply only to some roles, it should clearly set out the reasons why some are not eligible. The policy should also specify what the business’ expectations are in terms of the split between office and other locations.

For example, are employees expected to split their time 50/50 or attend on a set number of days between the office and other location? The policy should also consider if there are any specific circumstances, such as team or client meetings, where employees will be expected to attend the office and whether these will be on set days.

Clarifying what counts as a remote location is also important. Is it just the employee’s home or are other venues permitted? Will your employee need to inform a manager if they are working from a location which is not their home and how should they ensure that location is secure to work from bearing in mind data protection obligations? No matter what the location, the business’ data protection and computer security policy for remote working should be an integral part of the policy.

Working Abroad

There are significant legal and logistical issues with allowing employees to work from abroad for weeks at a time (e.g. immigration, tax, intellectual property, and data protection) which need to be carefully considered. A blanket approach of declining requests for extended working from abroad is certainly the easiest solution, however, this approach could unfairly impact vulnerable individuals and even give rise to indirect discrimination claims. Any limits on where the employee can work should clearly be set out in the policy whilst retaining the flexibility to consider any request on its merits.

Don’t Forget the Office

Your policy should also include what the business expects when employees are working from the office. For example, do they need to work set hours, or can hours be flexible? Are there any ongoing safe-working measures such as a desk booking system that need to be followed? Clarify what happens about expenses for travel to the office and specify what technology or equipment will be provided and whether you will require access to carry out maintenance checks on that equipment.

Other HR Issues to Cover

Ideally, your policy should detail health safety procedures and policies for employees whilst working from home, including risk assessments. It should also set out how sickness absence should be reported. The hybrid working policy should clarify what other types of flexible working options are available to employees, who will still retain the right to make a formal flexible working request. And whilst many employers are choosing not to update place of work clauses in contracts of employment on the basis that the approach to hybrid working is a flexible, informal one, some may decide to set clear contractual expectations, which will require change and agreement. Reviewing any benefit packages that may be inappropriate in a hybrid working environment is also a good idea – for example, would gym membership close to the office still be worthwhile?

Implementing the Policy

Once you’ve drafted your policy it will have to be implemented. There is no set procedure for this, but you would be well advised to consider the following steps:

  • Consult: seek feedback from employees, employee representatives or trade unions and address any concerns they may have before implementing the policy.
  • Support: offer training and guidance to help managers, who will face many new challenges, develop the skills needed to manage teams that are working both remotely and in the office.
  • Communicate: any business that adopts hybrid working will have to change how it communicates with staff, perhaps making team meetings by Zoom or MS Teams the norm and only conducting face-to-face meetings when appropriate.

Hybrid working, established long term, could very well make even greater demands of managers and organisations than the urgent shift to total remote or home working required at the height of the Covid pandemic. Flexible work policies will also give rise to a growing need for co-working or shared workspaces and hot desking office models.

Long term hybrid working is an option that has a proven positive impact on employee productivity, reduced real estate costs and the environment, however, setting out expectations in advance through a carefully drafted policy will help to ensure that those benefits are realised.

Getting Down to Business After Covid

Posted on by motionparadox

The lifting of Covid restrictions from 19 July removes more or less every domestic legal restriction in England in one fell swoop. All businesses will be able to open, without Covid-related capacity limits, and measures such as mask-wearing and social distancing will be left to people’s personal responsibility. Most Covid rules in Wales will be relaxed from 7 August if coronavirus rates allow. Welsh social distancing laws will be replaced with a requirement for risk assessments and legal limits on the number of people who can meet others will be scrapped. Face masks will still be required in most indoor public places in Wales (and on public transport in London) except in hospitality businesses, such as pubs.

Care will still need to be taken of course, but we can be positive about the fact that we are now able to do more activities than before and return to work. But now that ‘statute’ is replaced by ‘guidance’, transferring responsibility for COVID-related risk management from the government to individual organisations, what will this mean for employers in England and Wales?

Government Guidance

The government has published guidance on working safely during coronavirus and is no longer instructing people to work from home if they can, so employers can start to plan a return to workplaces. However, the government expects and recommends a ‘gradual return to offices’, with many of those who are able to work from home still doing so over the summer. Employees who are clinically vulnerable or have a compromised immune system will have no implicit legal right to demand home working, even if their workplace is not socially distanced and colleagues do not wear masks.

What Should Employers be Doing to Keep Their Employees Safe in The Office?

The so-called ‘Freedom Day’ on July 19 makes no difference to the duty imposed on employers under the Health and Safety at Work Act. You will still have a legal responsibility to protect your employees and anyone else coming into the premises from risks to health and safety. Employers should carry out a risk assessment, which may inevitably mean going above and beyond strict legal requirements – by how much will depend on each individual employer’s circumstances.

Protective measures such as hand sanitising gel stations and regular deep cleaning can easily stay in place. However, as part of a risk assessment, employers should also consider if social distancing should remain in the office. It is likely that retaining a requirement for mask wearing, particularly in communal areas, may be desirable, if only to reassure more vulnerable members of the workforce. If testing is already required, it’s sensible to retain this too.

Possible Discrimination Claims by Employees Returning to Work and How to Avoid Them

Whilst the Public Health (Control of Disease) Act 1984 and the Coronavirus Act 2020 grants considerable power to the government, the legislation stops short of forcing citizens to undergo medical treatments and vaccinations – at least in certain occupations. The House of Commons recently approved new regulations meaning that, from October this year, anyone working in a Care Quality Commission-registered care home in England must have two vaccine doses unless they have a medical exemption.

So, should you too require your staff to be double-jabbed as part of their job? It could be argued that it’s a reasonable step to take to reduce the risk of infection. Some may say it’s doing your staff a favour if they fancy going clubbing after September this year! Beware of going down this route though as requiring evidence of double vaccination could well give rise to discrimination claims on the grounds of age (younger staff members may not get their first jab until September at the earliest) or disability, where someone is advised not to have the vaccine because of underlying health conditions.

Instead, you should discuss the options with employees and any recognised trade unions or employee consultative bodies in advance. You should also consult with employees and representative bodies about the outcome of risk assessments and the proposed safety measures to reduce that risk to ensure ‘buy in’ from everyone.

Homeworking/Part Time Working Requests and How to Deal With Them

The employment contracts of most employees will likely state that their office or workplace is their contractual place of work. The most notable impact of the pandemic on that employment relationship has been the shift from the workplace to homeworking – what was once the exception has rapidly become the ‘new normal’. The initial stages of the pandemic meant that speed was essential when it came to mandating homeworking, but this has not created a contractual right to work from home given the instruction to do so came from the government, meaning employers and employees had no choice in the matter.

Employees with at least 26 weeks’ continuous service will still have a statutory right to make a flexible working request to permanently change the terms and conditions of their employment. These changes can relate to their hours, times they are required to work or the location from which the employee is required to work.

But now, given that the government will no longer be insisting that people ‘work from home’ from 19 July in England, employers face a decision as to where people are expected to work from. There has been a lot of talk about the adoption of hybrid working patterns and recent surveys suggest that people’s expectations around work, how they fulfil their role, and how they reconcile work and domestic responsibilities, have changed dramatically.

The key points for any employer here are clarity and communication. If you simply continue to allow homeworking after 19 July without comment, it is possible that, in due course, employees could argue that their contractual place of work has changed to their home. Forcing them back to the office at some future date would constitute a fundamental breach of contract, giving rise to a constructive unfair dismissal claim.

To avoid uncertainty and possible discrimination claims, it would be prudent to set out a government-style ‘roadmap’ describing the employer’s expectations of employees on returning to work and to communicate those expectations effectively to all staff, stating any general approach in some form of written communication, as well as regular virtual or face to face briefings.

However, it’s also worth bearing in mind that, if employers have learnt anything since the start of the pandemic, it is that their workforces are more flexible and resilient than they perhaps realised. With recent surveys suggesting that over half of workers would like to retain a mix of working at home and their workplace, and three quarters expecting employers to offer it, perhaps now is also the time to be thinking about policy on hybrid working?

Refusing to Return to Work

Some employees may refuse to come back to the office because they feel unsafe doing their required daily commute, especially if they use public transport, or they may have a clinically vulnerable person living with them. Can you insist they work from the office? After all, while employers have a statutory duty to provide a safe place of work, this legally binding obligation does not extend to the employee’s commute to and from work.

Instead, the employer should listen to the employee’s concerns and find out more about their circumstances: could they walk or cycle instead of using public transport or can an arrangement be made to avoid peak travel times and minimise social contact?

Flexibility and Communication is Key

Whatever the circumstances, flexibility and communication with your staff is key. It’s important to foster an inclusive working environment, ensuring that decisions don’t discriminate against certain groups of employees. Keeping people informed of what the business is doing will give them some degree of security and retain business productivity and make life easier for all concerned.

What is Corporate Law?

Posted on by motionparadox

Corporate Law is the body of law pertaining to the practices, structure, rules, and regulations, conduct of persons within corporations. Working in corporate law is highly sought after due to its dynamic, fast paced, and exciting nature.

What do Corporate Lawyers do?

Working in corporate law, no two days are ever the same. The general undertakings of a corporate lawyer include advising businesses on their legal obligations, rights, and responsibilities.

Corporate lawyers must be well versed in contract laws, tax law, intellectual property protection etc. The lawyers represent the corporation entity, not the shareholders, employees, or board members.

In the world of business, corporations are constantly faced by challenges and need to make important decisions which, for anyone without extensive knowledge, can become stressful. With the help of a lawyer, time can be saved negotiating and come to a conclusion faster. Typically, a corporation will work alongside a mid to large sized well-known law firm as they have a bigger capacity to help and more in-depth knowledge.  Some corporations hire lawyers from law firms they’ve previously worked alongside, to form their own exclusive in-house legal team to assist them with their legal matters.

Many assume that corporate lawyers spend their time preparing to argue in court, but they do quite the opposite. Their constant aim remains the same and that is helping corporations to avoid litigation – the process of taking legal action.

What is a Corporation?

A corporation is a legal entity that exists to conduct business whilst being entirely separate from its owners. Corporations are controlled and maintained by numerous owners through shares they have within the company.

Corporations are created and regulated under the corporate law found within their authority. To become a corporation, they must undergo a legal process called incorporation. Incorporation involves writing up a document known as ‘the articles of incorporation’, bringing the corporation into existence and separating the business’ assets and income from the investors and owners – known as limited liability.

Corporations can enter contracts, borrow money from financial institutions, own assets and both sue and be sued, known as corporate personhood. Corporate personhood voids shareholders, of all accountabilities for debts, lawsuits, and legal claims.

Like a government body, during the annual meeting the shareholders vote and elect a board of directors to act as their representative. The board must respect their new duty of care, act within the best interests of the corporation and make executive decisions that impact the shareholders.

How Corporate Law Can Protect Your Business

We know that ‘corporate law’ may not sound all that thrilling, but it is vital to ensure that you are protected.

Corporate law firms commonly advise corporations on mitigations and acquisitions, contracts, corporate governance, venture capital, security and protection from insider trading, fraud etc.

Corporate Governance

At Motion Paradox, we offer corporate governance services, helping you to ensure that your business complies with the rules and regulations set out by Companies House and HMRC. Combined with other services that we offer, you can rest assured that you’re saving time spent on paperwork, and you are operating within the law, efficiently and safely. Find out more about what we can do for you and your business.

Is it Necessary to Use a Corporate Lawyer?

In essence, yes, but only if you can afford one. A corporate start-up lawyer can help you draft documents and develop a business structure. They will be able to assist you in any stage of your development and aren’t limited to only helping large multi-million-pound corporations, in fact many startups and SMEs seek help from them. However, they can be quite expensive to hire, so we advise you assess your finances and business goals first.

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