The small business owner's guide to avoiding common, current legal issues The small business owner's guide to avoiding common, current legal issues

The small business owner's guide to avoiding common, current legal issues

What are the latest COVID-19 health and safety guidelines? How will Brexit affect business? Does GDPR apply business to business? Get practical advice to help keep up with these new rules and many more.

More than 40 per cent of small businesses find staying on top of legal matters stressful, according to a recent survey. And it's no surprise. Keeping up with law takes up valuable time, while falling foul of it can end up costing you big – in terms of fines, lawsuits and legal fees.

The survey also found that the five legal matters stressing out business owners the most are:

  • Health and safety
  • Late payments and debt recovery
  • Brexit-imposed regulation changes
  • Data protection (GDPR) matters
  • Redundancy or furlough matters

In this blog, we look at each of these areas and provide practical advice that will help you avoid common problems. Though specialist advice should always be sought in respect of any legal issues.

Health and safety

Health and safety at work has been high on the agenda for decades now. So while most businesses now have a clear policy in place, the pandemic has thrown a few more things into the mix that you may have not considered before.

Even if you do have a clear health and safety policy in place, the pandemic has thrown a few more things into the mix that you may have not considered before.

Make your workplace COVID-secure

Every workplace is different, but there are a few simple rules you can encourage your employees to do during the pandemic to help keep them as safe as possible:

  • work from home where possible
  • regularly wash hands
  • keep two metres apart
  • wear a face covering (unless exempt)
  • keep your work area clean and tidy
  • use sanitiser stations

The UK Government has published specific guidance on 'Working safely during coronavirus' for key industries, which will give you a complete picture of the steps you need to take.

Give homeworkers full health and safety support

This year has seen a huge rise in the number of employees working from home. But many don't realise homeworkers must receive the same level of health and safety support as they would in your workplace. This includes covering the basics, such as:

  • slips, trips, and falls
  • fire
  • lifting
  • electrical equipment
  • desk setup and posture

ACAS has some more detailed guidance on working from home during the coronavirus pandemic, including creating a homeworking policy.

Look after your employees' mental health

The pandemic has seen many people suffering from stress and anxiety. For many, this has included concerns about their jobs. Employees might be working longer hours, juggling work with home-schooling, missing social contact with colleagues, and much more.

As an employer, you have a duty of care to do all you can to support your staff's health, safety and wellbeing. If an employee is struggling with mental illness problems, they may be entitled to time off with Statutory Sick Pay (SSP). You may also need to make reasonable adjustments to help them do their jobs. To help prevent mental health problems from developing, carry out a risk assessment, offer counselling or appoint a mental health champion to help raise awareness of issues and available community support.

Late payments and debt recovery

Cash flow plays a key role in the success of most businesses. Unfortunately during the pandemic, lots of businesses are struggling financially – and many have folded completely.

The Government has injected money to support businesses – through grants, loans and furlough payments. This has certainly helped, but keeping your cashflow ticking over is not easy, especially if your invoices aren't being paid.

Help reduce the risk of a cash-flow shortage:

  • Ask customers to pay in advance if possible
  • Review the credit limits you offer customers
  • Provide your customers with regular statements of accounts
  • Establish clear payment terms and get them signed by customers
  • Set up reminder notices for overdue invoices

What you could do if an invoice goes unpaid

Whatever you choose to do – do it quickly. You could offer your customer a revised payment date – like an extra fortnight or more to settle payments. Or you could propose a payment plan, so they can pay invoices off in stages. Neither is ideal, but it's better to be paid late than never at all.

If that doesn't work, you could take legal action to recover the debt. In this instance, the first thing you have to do is send your customer a 'Letter Before Action' (LBA), detailing how the debt arose and the implications of not responding.

Hopefully, the LBA will do the trick. If it doesn't, there are several other things you can do to recover the money owed to you, including issuing a claim through the County Court Money Claims Centre (CCMCC). For more business debt recovery advice, you might find the Government's Late Payment Directive guide helpful.

Brexit-imposed regulation changes

Managing Brexit's effect on business can be difficult. Even for large businesses with legal and financial experts on hand. For some smaller ones, with no in-house legal guru to turn to, it can be a nightmare.

This is something the Government is trying to address, and in February 2021, they announced a £20m SME Brexit Support Fund to help small businesses with changes to trade rules with the EU.

As part of the fund, small businesses can apply for a grant of up to £2,000 to pay for practical support for importing and exporting, including training and professional advice.

Your business might be able to take advantage of the SME Brexit Support Fund to get the guidance you need. If you don't qualify or you need answers quickly, several other resources could help you better understand the Brexit-imposed regulation changes, here are just a couple of them:

Data protection (GDPR) matters

Data can be extremely useful to a small business – especially customer data. But you are responsible for protecting the personal data of anyone who comes into contact with your business – staff, suppliers and customers. Any breaches in data laws could result in fines and damage to your company's reputation.

The data protection buzzword in recent years has been GDPR, which stands for General Data Protection Regulation. The Government has created a Guide to GDPR to help you stay compliant. But here are a few things you could do right away.

Make a list of the personal data you hold

You don't need to amass all the data details you hold, this is just a top-line list of the types of data you have, such as: 'email addresses of customers', 'addresses of suppliers' etc.

Then ask: do I need it? If you hold people's data, you should only use it fairly and lawfully, which means in ways they'd expect. To help minimise your risk, only keep what you need, for as long as you need.

Tighten security

Introduce higher security measures, especially for sensitive information. This could range from using stronger passwords to installing reliable anti-virus software and correctly disposing of old IT equipment.

Be open and create a privacy notice

Honesty is the best policy – especially when it comes to personal data. Tell people why you'll hold their data, what you'll do with it, and how long you intend to keep it.

You should record this information in a document, known as a privacy policy. This isn't required under law, but it's recommended as it helps demonstrate your compliance with the data protection laws. It's important to keep your policy up to date and make sure it covers GDPR.

You can find out more about a privacy policy, and other similar documents, in our 10 important legal documents for small businesses blog post.

You can find Privacy policy templates on the internet that are available to download. If you do decide to create one, please make sure it's from a reputable source and that it's been written by experts. If you're a Direct Line for Business customer, our Legal Essentials* service will be able to help you further on this – we touch on this more at the end of the blog.

Know what to do if the worst happens

No matter how many safeguards you put in place, there's still the risk of a personal data breach – be it a malicious cyberattack or an internal mistake.

The Information Commissioner's Office (ICO) has created a simple guide for 'How to respond to a personal data breach' – with one of the key pieces of advice being to contact them ASAP.

Further information on data protection

The already mentioned Guide to the General Data Protection Regulation (GDPR) could help you. Also, the ICO website offers comprehensive guides and support on everything relating to GDPR and data protection.

Redundancy and furlough matters

What does furlough mean in business? What was once a little known term has been on everyone's lips during the pandemic. Unfortunately, many businesses have also had to make people redundant. Managing either can be difficult as you have to do it all by the book or risk being fined or sued.

A better understanding of the redundancy process

Making employees redundant is probably the last thing you want to do, and we understand it can be as difficult for you, as it is for them. To make it as fair as possible for the employees involved, there's a multi-stage process you need to follow.

The process begins by looking at alternatives to redundancy, such as furlough, changing working hours, and stopping overtime. Other stages include selected employees, working out redundancy pay, and an appeals process. The ACAS website has a Step by Step Guide to Managing Staff Redundancies that you might find useful if you have to go down this path.

For more pandemic-related employment law advice for small business, check out our other blog post. It includes information on redundancy, SSP for shielding, coronavirus related absences, and more.

Staying up to speed with furlough

Even though the Coronavirus Job Retention Scheme, also known as furlough, has been commonplace for a while now, it's still not the easiest of things to get to grips with. Often because things change frequently with the scheme.

Staying on top of updates is important. Fortunately, there is widespread reporting about furlough across the news channels, so you're likely to hear it there first. To be 100% sure you aren't breaking any laws and you're doing what you should, you can visit GOV.UK. Alternatively, seek the assistance of your accountant or the organisation running your payroll.

Enjoy legal peace of mind – as standard

Hopefully, this blog has given you a good idea of what you can do when you encounter some of the more common legal issues small business owners are currently facing. Although, we do understand this is only generic information, and not directly related to your business or potential legal issue, which is where our free Legal Essentials* service could help you further.

As part of the service you get a 24/7 legal advice helpline, whether you're facing a serious legal issue, or just want to check something with a solicitor. You'll also get unlimited access to a library of contract templates, tools, and guides to help you run your business and stay compliant with the latest regulatory changes. What's more, the service is included as standard when you buy or renew any of our business insurance policies.

We can't guarantee you'll sleep like a log, but knowing you've got the support of this service may help put your mind at ease. On the legal side of your business at least.

Not currently a Direct Line for Business customer? Get a quote now.

1Opinium survey of 250 small business owners conducted 5th–10th February 2021.

* The legal helpline and document services are provided by DAS Legal Expenses Insurance Limited. 24/7 helpline England and Wales only; advice in other jurisdictions is available 9am–5pm, Monday–Friday, excluding Bank Holidays.


Small Business Insurance

Added: 14 Jul 2021