July 23, 2020

Contract Review Helps Business Re-Launch

Written by Nia Godsmark

The lockdown has caused problems for many companies; however, for some small business owners, the quarantine period has been a time to review the organisation as a whole.

From updating the website and giving the premises a lick of paint to strategic reviews relating to the business plan; the lockdown has been an opportune time to either get things done that have been on the backburner, or streamline the business for re-opening.

For one such business, the focus was to review their legal documentation, or more importantly, the lack of it, as Nia Godsmark, partner and corporate lawyer explains:

“One of our clients is a small, but well-established health & wellbeing centre who, like many in the healthcare & beauty industry, was severely impacted by the lockdown and social distancing measures,” said Nia.

Although the company had operated for many years, the period from March 23rd gave the owner time to reflect and look at implementing several business changes that would enable the business to re-open in a stronger position.

Key to this change was the use of her website as a sales tool as well as how she could diversify her services without the need to employ new staff members.

“Successful entrepreneurs, by their nature, are risk-takers,” continued Nia, “but it pays to seek professional advice as in many circumstances, we can reduce the levels of risk by putting in place the correct legal agreements.”

In this specific scenario, the risk centred on two key areas:

  1. Selling online
  2. The use of sub-contracted staff

Selling Online

“As she was unable to trade in the normal manner and was unsure when her sector would be allowed to re-open, the need to generate income through her website was critical,” said Nia.

With a short term focus on selling products through the site as well as a medium-term plan to allow clients to book treatments and pay online, the immediate need was a robust set of terms and conditions for the sale of goods and services.

“Although these are not a legal requirement to sell products and services,” said Nia, “without them, you are leaving yourself and your business hugely exposed to an expensive legal claim if something goes wrong.”

With the ability for the T&C’s to cover a multitude of scenarios, they gave the business owner the flexibility and security to use them for a wide range of products and services, ultimately safeguarding the business for a relatively small amount of money.

Next, was the risk associated with using sub-contracted staff instead of employing people directly.

“As the lockdown had effectively stopped the business trading overnight,
offering new services to entice new clients once the quarantine was over meant and increased wage bill, which was always going to be difficult,” continued Nia.

This had also proved a stumbling block in previous years, as offering a new treatment or service meant employing a new staff member without knowing how much revenue they would generate.

However, the quarantine period gave the owner the chance to review the use of subcontractors as opposed to always having to employ someone as a staff member.

“Sub-contractors can be a great way for businesses to tap into the skills of an individual without having the wage overheads associated with a full or part-time staff member,” said Nia.

“Flexible hours are also an appeal; however, the pros must be weighed up against the cons,” she continued.

With the potential of a claim for unfair dismissal, as well as holiday pay, sick pay and pension contributions, using sub-contractors can be fraught with legal pitfalls if mishandled.

“We drafted sub-contractor agreements which treated the contractor fairly, whilst at the same time, protected the business from potential legal problems.”

This enabled the owner to diversify her services without worrying about significantly increased overheads and helped the business as a whole prepare to come back from the quarantine period with a new menu of treatments.

“All in all, the opportunity to review the business has been beneficial, and by talking through her plans and ideas with us, we were able to identify the risk areas and put in place the right agreements to help prevent legal problems,” concluded Nia.

Even if your business has re-opened or continued trading as normal over the lockdown period; if you would like to review your existing legal documents or draft new ones, get in touch with Nia Godsmark on:
01792 450010
[email protected]

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