info@stonelaw.ie 053 9146144

STARTING A NEW BUSINESS-THE LEGAL POSITION

I am just about to open a new business and am taking on 3 new employees. Can you give me a few pointers as to what legal issues I need to consider?

  • EMPLOYEES- The Terms of Employment (Information) Act 1994 requires that employees must be issued, within two months of the commencement of their employment, with a written statement of the terms and conditions under which they are employed. The Law does not specify what issues must be deal with comprehensively in this statement although it does prohibit certain terms. Many small businesses are unaware of these legal obligations and many employees in Ireland have no written contract of employment.

Apart from simply complying with statutory obligations it is also best business practice for an employer (and indeed for an employee) to agree the exact terms of employment and to record those terms in writing before the new employee takes up the position. This will ensure that both parties are fully clear as to what has been agreed and will hopefully make it less likely in the future that the parties will become involved in a dispute over the terms of employment.

Certain statutory rights of an employee cannot be removed by contract even if both parties agree to such clauses. Employees always retain rights;

  • Not to be discriminated against
  • In respect of Equal pay for equal work
  • To receive An itemised pay statement
  • To have Maternity/paternity/adoptive/carer’s benefits and leave.
  • To receive Minimum Notice on termination of employment.
  • To have Safe systems of work.
  • To belong (or not) to a trade union.
  • To have Time off for Jury service.
  • To Protection of employment rights when the business is sold.
  • Not to be unfairly dismissed.
  • To have Rest periods/breaks
  • To have Holidays
  • To be paid At least the minimum wage
  • To be treated no less favourably as a part time employee than a full time employee

The contract should set out clearly the expected duties of the employee. This will ensure that there will be no misunderstanding on this issue between the parties and from a business point of view will mean that the employee will have a clear understanding of what is expected of them by their employer.

The company’s policies on sick pay, disciplinary procedure, grievance procedure, retirement age, booking holidays, dress code, taking personal calls/emails at work are all normal matters to be addressed in the contract.

  1. PREMISES- If you are starting a new business and have invested time, energy and finance in finding the right premises, it is essential that you have a formal written lease with your Landlord.

The Lease terms will deal with issues such as the length of the term for which both of you are committed to the arrangement, the amount of rent and the manner of payment, how long the rent will be fixed for and the system for its review, if any, who is to be responsible for repairs, who should pay the rates, refuse charges and other outgoings and the insurance requirements.

Traditionally the terms of retail leases have either been short term leases (usually 4 years and 9 months) or long term leases (now usually 15 years). Short term leases generally suit a trader who is starting a brand new business and has had little experience in business and wants to wait and see how the business will go and is accordingly afraid of the long term commitment of a longer lease at the start of the venture. Indeed sometimes it is the Landlord who is nervous of the new Tenant’s ability to make a success of the business and who therefore wishes to avoid a long term commitment to that Tenant at the initial stage.

In a short term lease the repair obligations tend to remain with the Landlord whereas in the longer term lease (generally known as Full Repairing and Insuring Leases or FRI Lease) the full repairing obligations tend to fall fully on the Tenant.

In both Leases the Tenant normally has to pay the rent, the commercial rates due to the Local Authority, refuse charges, water rates, normal utilities and the Landlord’s Insurance premium for insuring of the building. In addition the Tenant will need to take out his own insurance to cover his business, his contents and employer and public liability risks.

Your Solicitor will go through the Lease terms with you and will explain them to ensure that they are suitable and appropriate to your business and your future plans. In addition to advising you on the Lease terms, your Solicitor will carry out a number of important enquiries before you commit to the Lease. He will check whether all previous bills for outgoings on the premises including commercial rates have been paid up to date so that you will not get stuck with a previous occupant’s debts/bills. He will investigate the planning status of the premises to ensure that it has the appropriate planning to permit the trade or business you wish to operate.

  1. SOLE TRADER OR LIMITED COMPANY- You will need to take advice from your Solicitor and Accountant as to whether to commence trading as an individual sole trader or as a Limited Company. The new Companies Act 2014 is a complex piece of legislation running to more than 1,100 pages but on balance makes the setting up and running of a small business through a company less difficult than heretofore.

On the one hand, operating the business as a sole trader involves less paperwork and compliance issues than operating a limited company. However, operating the business through a limited company offers the owners the security of knowing that if the business were to fail then their personal exposure would be less than as a sole trader. The tax efficiency of each option would also need to be explored depending on the circumstances of each case.

Success or failure in any business rarely occurs by accident. Those who plan in advance, who do the groundwork and seek good advice from competent and experienced professionals are much more likely to succeed.

Val Stone is the Managing Partner of Stone Solicitors, a law firm based at The Bull Ring, Wexford. Stone Solicitors can be contacted on 053 9146144 or by e-mail at info@stonelaw.ie

Visit our website at www.stonesolicitors.ie

 

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