For individuals within business

This page deals primarily with issues that arise from the relationship that an individual has with the business or with others in the business. If you are seeking advice on issues related to the business itself, please refer to our information for businesses.

Many people who work in a business are not fully aware of the different relationships they may have with the business and their colleagues. For example, setting up a company with a colleague can immediately give rise to three different but concurrent relationships as shareholder, director and employee; they all have different implications.

If you set up in business and share the profits and losses, you are likely to have formed a partnership even if you have no piece of paper which says so. None of the partners can be employees of the business, unless special arrangements are made.

If you need advice on what to do when starting a business click here.

When working for a business, you may not necessarily be a full time permanent employee. You could be a casual worker, or an agency worker, or a part-time Fixed Term employee. All of these will have employment rights of some sort. Alternatively, you could be a self-employed consultant, with no employment rights at all. Sometimes the initial discussions don’t define this very closely or the business relationship continues for longer than originally planned and the relationship may change without the parties becoming aware of this.

Whether you are an employee or a consultant can have obvious implications for such things as PAYE and National Insurance as well as employment rights. However, it can also affect other issues such as the ownership of intellectual property rights in copyrights and designs produced by that individual.

We also see situations in which companies who are desperate not to create an employment relationship unintentionally create a commercial agency and fall foul of the Commercial Agent’s Regulations 1993. If you are a commercial agent you have a number of statutory rights under these regulations including a right to claim compensation if your agency is terminated.

For others, the relationship may be as an equity investor (with shares and a management role), a lender (with or without security), a licensor or licensee of intellectual property rights, a landlord or tenant.

Finally, if you are effectively a sole trader (i.e. you alone own the business- it does not matter that you employ others) everything you do will affect you as an individual…and your liability under all your contracts will be unlimited. Even if your house is not owned by “the business” it will be at risk if you incur debts if it in your name that “the business” cannot pay. You need to manage this risk very carefully.

Whatever your business you will wish to leave at some point. Ideally you will wish to realise the value of the business you have created. In practice, if you wish to do this you need to start planning early. For further advice see our information about leaving a business.

If you are dissatisfied with your professional advisers or feel that their advice, actions or omissions may have caused you or your business to suffer some loss you may have a claim for professional negligence. If you think this is so, please do contact us for an initial view by completing the enquiry form.

If you need advice on setting up any of these relationships or reviewing a contract you are being offered, or you seek advice on an existing contract you may find some general guidance in Running a Business. If you need advice specific to your own situation please complete an enquiry form or contact us.

For individuals within business

More information about running your business

More information about employment matters