February 21, 2019
We participated in Solicitors Chat yesterday on Twitter answering questions about Avoiding Common Business Mistakes. Our commercial team were on hand to provide some much needed guidance. We’ve set out our answers out below.
1. How can businesses make sure their contracts are properly drafted and why is it important they do so?
Whether it’s commercial or employment contracts, it is key that businesses conduct a review of their contracts periodically and ensure they are kept up to date with legislation changes. Employment legislation is becoming increasingly complex and it is important that businesses make sure contracts are drafted properly by instructing solicitors to draft contracts tailored to their business needs.
2. Roughly how often would you recommend businesses review their contracts?
At a minimum every 2 years, but this may have to be more frequent if legislative changes come into force which affect any Contracts.
3. What issues do companies face if they’re not compliant with employment laws?
If companies fail to keep up with legislation changes, or are not compliant with employment legislation from the start of an employment relationship, they could find themselves in the Employment Tribunal for claims for unfair dismissal, breach of contract or discrimination. Non compliance with legislation could lead to enhanced compensation payments to the employee, for example failure to comply with the ACAS Code of Practice could lead to an uplift of 25 per cent. If any employment claim is made against an employer they have no option but to defend it and usually do not recover their legal costs in doing so.
4. What are the consequences of choosing the wrong business structure and how can a solicitor advise on the right one?
Of all the choices you make when starting a business, one of the most important is the type of legal structure you select for your company. This decision will have an impact on how much you pay in taxes and affect the amount of paperwork your business is required to do, as well as the personal liability you face and your ability to raise money. Instructing a solicitor from the offset can help prevent issues down the line and make sure you make the right decisions for you.
5. How can businesses make sure they’re GDPR compliant and what happens if they aren’t?
The General Data Protection Rule (GDPR) applies to all business and organisations established in the EU. Businesses can ensure that they are GDPR compliant by appointing a Data Protection Officer who is in charge of GDPR compliance.
You should also ensure that you have policies and procedures in place to protect personal data. There are big penalties for those who don’t comply with GDPR.
6. What are some other common legal mistakes a solicitor can help businesses with?
One of the most common mistakes that we see is not putting an agreement in writing. Whilst we advise that any business arrangement is professionally drafted, without a written agreement you have little chance of effective enforcement of that agreement. Landlords in particular have to be especially careful about incorrectly drafted documents creating protected business tenancies.
If you would like some more information about setting up a business, business contracts or general business advice, contact our commercial team on 0800 158 4147 and book an initial consultation today.