Choosing providers for your employment law and HR
Posted on 16th January 2023 at 10:03
If your organisation is an employer, you will at some point find you need HR management and employment law knowledge to prevent or resolve a problem.
Employing somebody permanently in-house may be disproportionate to your actual needs. An outsourced HR provider may be better suited to your needs and finances - giving you the benefit of knowledge and experience without paying another wage.
But the choice of services can be overwhelming. You could choose:
- An independent HR provider or advisor (depending on how involved you want to be)
- An employment law solicitor, either on retainer or paid as needed
- A combined service, such as Peninsula HR or Citation
As every business is unique there is no right or wrong choice in general, only what is right for your business. These are some of the things you should consider to help you decide what is right for your business.
What is the difference between a HR provider and an Employment solicitor?
An Employment Law solicitor gives advice about what the law says, how it applies to your circumstances and how to stay on the right side of it. HR Consultants advise on more ‘soft skills’ areas such as candidate attraction and selection, culture, morale and management.
Solicitors’ extensive training in the law is vital in complex and technical areas such as TUPE, restrictive covenants, discrimination and the preparation of employment contracts. If you find yourself embroiled in a legal claim, a solicitor will support you with the litigation process from the outset, from preliminary dealings with ACAS, throughout the claim to a tribunal hearing and dealing with negotiations to resolve the matter.
Solicitors are regulated by the Solicitors Regulation Authority (SRA), so you have the peace of mind that they meet high standards. HR advisors are not regulated but may choose to be a member of a professional body as a sign of quality.
It is likely that during your time as an employer, you will need advice on both HR and Employment Law at some point. Solicitors and HR departments often work together complementing each other’s services and skills. For example, in matters of redundancy or TUPE you might instruct an employment solicitor to ensure the processes are legal and to draft agreements but ask an HR provider to hold consultations with employees. A good HR provider may help to avoid disputes and reduce the likelihood of litigation. However, you will almost certainly need more technical advice at some point.
For this reason, some larger HR providers include employment law support in their service. Whether this is the best option for you will depend on factors individual to your business. If your business experiences a lot of issues requiring a solicitor this could represent good value – as long as the service is of a high quality. If you require mostly HR advice and have very few legal issues, it may be expensive to pay a higher rate for legal advice you won’t use.
It could be more cost effective to consult an HR advisor and instruct a solicitor only when you need one. This also means that when you do need a solicitor you have the freedom to choose a firm that is the best fit for you and your issue.
If you are a new employer you could take this approach while you get up and running, to understand how much support you need in practice. If you then choose to commit to a long-term service, you can compare quotes to your average spend on legal advice.
What size firm is best?
This comes down to personal choice. Do you want a global business with thousands of clients in the UK alone - they must be doing something right? Or would you rather work with a smaller, specialist firm where you speak to the same dedicated advisor who can get familiar with your business?
Are you happy to spend some of your own time editing one-size-fits-all templates to fit your business? Or would you rather speak to an advisor who can take time to understand your business and priorities, advise you of your options and help you to choose the best solution?
Whichever you choose, consider the size of the department not just the firm. A large firm may have a small employment department, with only a few specialist solicitors supported by paralegals or assistants. Some smaller firms actually have the same amount (or more) of Employment solicitors as big firms.
Again, there is no ‘right’ choice. One large legal firm with a department for each of your needs will be able to deal with most of your business activities. You may even be able to negotiate a reduced rate based on the amount of work you give them. However, you may struggle to find a firm where every department is the best in that field. Finding a firm for each of your legal needs may mean more research and decisions but could mean you find firms offering more expertise and better service.
Your advisors’ qualifications
There are some issues that both an employment solicitor and an HR provider can advise on, but in other issues only one or the other will be able to help. Many larger firms, especially those combining HR and Employment Law, will use staff who are not legally qualified to do all but the most technical work, usually relying upon scripts and templates provided by a handful of solicitors. This makes the service cost effective but may mean the advice is generic and less in depth.
Solicitors are experienced at understanding how the law applies to different situations, so can respond quickly to unexpected issues. In contrast, larger firms may be less responsive as advisors will need to wait for in-depth advice from more qualified staff. Consider an unexpected situation like the Covid pandemic. Solicitors were able to look at the wording of clients’ contracts to advise whether they could legally lay-off workers, change their working hours or refuse sick pay when isolating. Employers could discuss their plans with a solicitor to find out if they were legal and effective, rather than trying to make standard guidance work for their business. While we hope there are no more pandemics, it underlined how important it is for businesses to be responsive to change.
Qualifications also matter when you are making an enquiry. A solicitor has a professional duty to always work in your best interests and can help you understand which services you need, the likely cost and whether they are the best person to help. Salespeople may be less connected to the service team (especially in larger firms) and have less in-depth knowledgeable about the services offered. Make sure you can differentiate between advice and sales.
Is the company regulated?
Solicitors’ firms are regulated by the SRA. HR firms are not regulated as an organisation – only the individual solicitors within them.
In a regulated firm, every member of staff will meet SRA professional standards in the level of care they provide, from enquiry through to billing. An unregulated HR firm might still offer the same level of service but there is no guarantee.
An SRA regulated firm must also have the minimum level of insurance specified. In addition, you will qualify for the SRA compensation fund if things go wrong.
We appreciate that cost is often a high priority, especially for small businesses with limited budgets. Choosing a provider often means balancing the cost with the level of service.
Sometimes, what seems like the most cost-effective option is not so reasonable once additional costs are included. Look for a firm that is transparent about costs and happy to answer questions. It is best to understand all the additional fees and when enhanced rates might apply before you commit. A good advisor will understand that you need certainty and will want you to understand what you are committing your business to.
Companies may consider several factors when setting your monthly retainer - such as your past usage, the number of issues you have faced in the past years and risk factors in your industry - or it may be based purely on the size of your company. This may offer good value if you need a lot of support, but you may end up paying more over the period of the contract for support you do not need. With an hourly rate, you will only pay for the work you need.
A long-term contract can make financial planning simpler, but the lack of flexibility can be a disadvantage if your needs change. For example, if your business makes changes such as downsizing, you will want this reflected by lower payments. This flexibility is especially important for smaller businesses, as the additional cost can be the difference between surviving or closing.
We have dealt with clients who were paying a monthly fee for HR and legal advice but lost trust in the provider and ended up paying us for advice too. What seemed like a good deal was far less cost-effective when they were paying twice over.
Should I get Legal Expenses Insurance in the same package?
Some HR services include Legal Expenses Insurance (LEI) for additional costs such as court claims, appeals, the cost of expert witnesses and the cost of compensation and damages. This provides additional peace of mind in one payment. However, it does mean putting all your eggs in one basket. The alternative is to purchase LEI from a standalone insurer, often as part of your business insurance. These firms will have recommended firms to work with, but you do have freedom to choose your own solicitor who accepts LEI.
There may be a time where you feel your interests are at odds with the interests of the insurer (for example, if the insurer wants you to settle to mitigate any risk, but you want to fight the claim). Where your legal and insurance services are bundled into one, there is no way to be sure whether your interests or your insurer’s interests are being prioritised. When working with insurers, we sometimes push back on decisions to fight for your best interests as we see them. For example, we may persuade the insurer to cover certain work that they initially refused.
Some contracts may contain clauses which could void your insurance. For example, you may need to show you followed their advice – even if it was not specific to your business. A solicitor won’t turn you away if you have made a mistake or did not follow best practice. Instead, they will advise you on the impact of that mistake and how to resolve the issue. Where all these workings are internal in one company, you can’t see how decisions are being made.
Insurance services are usually not keen to cover ongoing issues. Be clear about what counts as ‘ongoing’ – does it mean claims that are already with ACAS, or will they refuse to cover future disputes if you already have a grievance in progress? Often, once you realise you need employment or HR support, the issue has already begun. This won’t be an issue for a solicitor, as many of our clients engage us for help with an existing problem. If you aren’t sure about HR and employment support, at least take out LEI to pay for a solicitor if a problem develops.
The best option is the one that suits your business needs and budget. You will need to consider factors such as cost, flexibility, level of service and expertise. Whatever type of provision you opt for, ensure you understand how they charge and whether there might be additional costs involved. Don’t be afraid to ask questions, as it is important you find somebody you are comfortable working with.
If you think you may need legal advice from a solicitor, please get in touch. We will take some initial details, then arrange for one of our solicitors to call and discuss whether we can help you, and how.
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