Advice from an HR consultant in Dorset on how to protect your business from employment law surprises

When your business is growing, it’s tempting to keep working relationships flexible and informal. It feels easier for everyone: less paperwork, more adaptability and a sense of trust. But over time, these casual arrangements can quietly create legal obligations you never intended.

I see this often in my work providing HR consultancy services in Dorset. What starts as a convenient setup can turn into an expensive dispute if it doesn’t match employment law. Here are three common situations that catch business owners off guard and how to handle them.

The regular worker without a formal contract

You may have someone who works fixed hours every week, knows your customers well, and plays a key role in your operations, but there’s no written agreement.

The reality is that if they take direction from you and can’t easily be replaced by someone else, the law is likely to treat them as an employee, no matter what you’ve called the arrangement.

Why this matters:

  • They could be entitled to holiday pay, sick pay and other statutory benefits

  • You might face claims for backdated payments if the relationship ends badly

  • Disputes are harder to resolve without clear terms

The fix:

A straightforward employment contract protects both you and them. It clarifies expectations, ensures compliance and gives your team member the rights they are entitled to.

The contractor who works like an employee

They invoice you through their limited company, but they follow your schedule, use your equipment and work like part of the permanent team.

The risks:

  • Potential claims for unfair dismissal or redundancy pay

  • Liability for unpaid holiday and other benefits

  • HMRC challenges for unpaid tax and National Insurance

  • Insurance gaps if something goes wrong at work

The fix:

If they don’t have genuine independence in how, when, or where they work, it may be time to reclassify the arrangement. This doesn’t mean losing flexibility, it means gaining legal clarity.

The flexible worker with no written terms

Seasonal cover or occasional project help often starts informally. But UK law requires written terms from day one, even for casual or temporary workers.

The risks:

  • Disputes over pay, hours, or notice periods

  • Stronger legal protections than you expected if the arrangement ends badly

  • Complications when work levels change suddenly

The fix:

A short written agreement can cover the essentials: pay, hours, notice periods and how changes will be handled. It keeps the relationship clear and fair from the start.

How to make sure your arrangements are safe

The key is matching your contracts to the reality of the working relationship. If someone is integrated into your day-to-day operations, they probably need employee-level protections. If they truly control their own work, they can remain a contractor.

Steps to take now:

  • Review how each working relationship actually operates

  • Ensure contracts match the real level of control and integration

  • Reassess arrangements regularly as roles evolve

  • Get advice before making changes you’re unsure about

Protecting your business as it grows

As your business develops, working relationships will change. By addressing these shifts early, you can avoid disputes, protect your reputation and keep your team relationships healthy.

You don’t have to navigate this alone. Working with experienced HR consultancy services in Dorset means having someone who can review your arrangements, flag risks and put the right contracts in place before problems arise.

If you want to be confident that your working arrangements are set up correctly, or you’re concerned about a current setup, let’s have a confidential conversation about how an outsourced HR consultant in Dorset can protect both your people and your business.