5 Major Employment Law Issues For Startups To Avoid

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AHLAWAT ASSOCIATES ADVOCATES
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AHLAWAT ASSOCIATES ADVOCATES
5 Major Employment Law Issues For Startups To
Avoid
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AHLAWAT ASSOCIATES ADVOCATES

• Starting a business is not an easy task and
  hiring employees for it makes it even more
  difficult. Most startup owners face employment
  law issues as they do not hire a labour law
  consultant thinking it to be an unnecessary
  expense.
• Here are some major employee law-related issues
  that all new entrepreneurs must avoid

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1. Wrong Classification Of Employees

• One of the biggest mistakes that new business
  owners make is to incorrectly classify their
  employees. Hiring someone on a contractual basis
  is much cheaper than hiring a full-time worker.
• Most new employers do not know whether salaried
  staff members are exempt from overtime payment or
  not. Both scenarios can lead to hefty penalties
  as they violate important labour laws.

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2. Inefficiently Planned Equity Incentive Plans

• A common problem that most startup owners face is
  the inability to hire exceptional talent as they
  are unable to pay high salaries. The equity
  incentive plan is an effective solution that is
  used by many entrepreneurs to attract good
  professionals towards their organization.
• Company shares are offered to prospective
  employees as compensation for the low salary
  being paid to them. It is thought to be a good
  motivational tool as the good future of the firm
  will make the worker richer.

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3. Paid Leave Policy Not Complies With Local Law

• One of the most common employment law issues
  faced by startups is because of the unlimited
  time off leave offer.
• When a person leaves a job, the employer pays for
  all the unused leave days. In order to avoid
  this, they offer unlimited time off to staff
  members. Labour law consultants in India, as well
  as other nations, advise that this is not a
  sensible move.

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4. Failure To Create An Employee Manual

• Another common mistake committed by new
  businesses is the failure to create an employee
  manual.
• This document which contains an organizations
  employment policies, ethics code, and other
  information is a helpful tool in preventing
  employee litigation.
• A handbook will prevent a worker in coming up
  with the argument that he/she was unaware of a
  rule or condition because of which he/she was
  penalized or sacked.

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5. Drafting Improper Employment Contracts

• A startup owner hires workers in the Indian city
  of Delhi without using proper employment
  contracts. It felt that hiring labour law
  consultants in India who specialize in advising
  small businesses will be an unnecessary expense.
• It drafted the documents herself and used them to
  make appointments. When a worker sued her over
  some issue, she had to pay a hefty penalty as
  there were no sufficient protective clauses in
  the contract.

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