How to Avoid Common Employment Legal Issues Come Up for Startups

A good number of people leave their temptation for 9 to 5 jobs and start their own companies. This helps them to make the best use of their talent, provide job opportunities to the needy people, and make handsome revenues every month. Startups make several legal mistakes while hiring, compensating, dismissing employees. These employment law missteps can invite several litigations against the company, damage its reputation, and hamper the business opportunities. So, if you run a startup business, here are some steps you should take to avoid mistakes while dealing with employees and provide a pleasant working environment to them:

1. Give A Written Contract Of Employment To All Employees

A contract of employment contains the main terms and conditions of the employee’s employment. It also has the rules and regulations of the company that is supposed to be followed by all employees. There are many companies that don't provide a written contract of employment to their employees due to several reasons, such as to avoid the employment liabilities, steal tax liabilities, etc. Failing to provide the written contract is simply a violation of the employment law. You can land in a tough legal predicament if something goes wrong, like employees leave the job without notifying the HR, theft of valuable property of the company, bogus cases, etc. A written contract of employment keeps you away from all these problems and help you to treat your employees fairly.

2. Don't Violate Wage And Hour Laws

As per the employment law, all employees are entitled to get the minimum salary and overtime payment as determined by the federal government. Most of the startups tend to pay small amounts as salaries to their employees in order to reduce their operational cost.

If you don't pay the basic salary to your employees, refuse to pay them for overtime or compensation, its consequences can be extremely severe. If you are caught, law enforcement agencies can impose heavy penalties against your company. You can also be asked to pay unpaid wages and payroll taxes with interest and penalties to employees. The discovery of such violations can damage your company's reputation and affect your chances to make M&A transactions. So, you should pay your employees as per the government's rules and regulations. It will eliminate the chances of legal cases against your company.

3. Avoid Conflict With Previous Employers:

In many cases, startups encourage employees to bring business secrets, customers list, etc, This is unfair business practice and a subject matter of costly litigation. So, Startup companies should prohibit employees from bringing materials that are subject matters of confidentiality on the company's premises or are owned by other companies. It keeps your company away from needless litigations.

4. Obey Your Own Rules

Every company has a good set of disciplinary rules and procedures, unacceptable behavior together with the potential consequences of that behavior, business practices, modus operandi of the business, etc. If you don't obey your own rules, it will be very difficult to manage business operations and achieve the ultimate goals. So, you should implement disciplinary procedure at the workplace to make the business practices smooth and fast.

 

5. Termination Of Employees

Companies can terminate employees because of their poor performance, unparliamentary behavior at the workplace, etc. A good number of startup companies terminate their employees illegally which becomes a serious legal issue if the fired employee take legal action against the company against his/her illegal termination. 

Therefore, you should have clear rules and regulations about hiring and termination of employees. You can make specific rules and regulations regarding this with the help of labour law consultants in India. They also help you to deal with fake cases filed against your company by fired employees.

Final Words:

All startups must follow the rules and regulations of the employment law. Background checks, proper employee manuals, policies to handle harassment or discrimination issues, terminations and layoffs are mandatory for all employers. By following the above-mentioned tips, you can easily avoid several legal issues related to employment of workforce in your company.

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