Client-facing business can enact policies to address inappropriate out-of-hours behaviour
Tax hurdles of turning employee into a partner
SJ writes: I have been working as a sole trader for eight years but recently invited an employee to become a business partner. We have no plans to incorporate the business. What do we need to consider when setting up the new arrangement?
If you appoint a business partner to act alongside you in your business, you will become a partnership, writes Jon Dawson, partner at Kingston Smith LLP. Your new partner will then cease to be an employee.
You will first have to establish how you will split responsibilities, profits and ownership of the new business with your partner. This should be documented before the partnership is formed, so you both clearly know the terms under which you will work together.
In most cases, your new partner will become self-employed and will need to register with HMRC for self-assessment. You will also have to register the partnership with HMRC. Once it is up and running, it will need to prepare an annual set of accounts and a partnership tax return, both of which will form the basis of your respective personal tax returns.
For your partner, becoming self-employed will mean paying their own income tax and national insurance, unless the partnership retains this for them.
If you are VAT-registered, there are two options. You can register the new partnership and transfer the VAT number, or you can deregister the sole trader business and set up a new registration for the partnership. The latter option will clear the VAT history, so if you have filed or paid any VAT late in the past, it is a good opportunity to wipe the slate clean.
I fear violent worker could damage my firm
KS writes: I have an employee who, outside work hours, has managed to get himself into some bother, most particularly a scuffle. While this is not directly work-related I am conscious that he represents the business. What action should I take?
Employers should be aware staff have the right to privacy in their home lives under European human rights provisions. But this does not mean that no action can be taken for their behaviour outside work, writes Peter Done, managing director of Peninsula.
Client-facing businesses often implement policies on outside behaviour within contracts of employment, such as requiring them to maintain integrity within the workplace and maintaining the same standard of behaviour outside work hours.
Policies that highlight what is expected of employees, what will constitute an act of misconduct and what disciplinary action can be taken against staff are important tools to deter employees from taking part in activities that can affect the reputation of the company and allow businesses to manage these circumstances.
Where it is apparent that an employee’s behaviour is damaging the company’s reputation, or is undermining confidence in them, it is likely that action should be carried out. The employee is representing the business and his actions may have a negative effect on how your clients perceive the company.
Though fights are not work-related, they will still have an impact. For example, is the member of staff facing clients with bruising, is he bragging about the fight on a social media page, which is clearly connected to the business, or have the fights made the local press where he is reported as an employee of yours?
The exact circumstances surrounding the effect they are having and the link with the business need to be identified; if it is clear that the activities are completely unrelated to the business, it may be difficult to prove that any action against the employee is necessary and reasonable.
Where it cannot be proven that the employee’s behaviour is causing an adverse effect on the business, it will be possible to approach the person informally and remind him about his duties to the business, ie to maintain a professional façade and attitude while representing the company, and explain to him how his behaviour has the potential to damage this and can breach the company’s policies.