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Leaving Your Employer To Start A Business

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Springing in to a new career?


Banner Jones Employment Solictors
Employment Lawyer team for Banner Jones Solicitors

By Sara & Katie


Spring has officially arrived (not that you can tell from the amount of snow we have had recently!) Spring marks the start of new beginnings and for some people this involves embracing their dreams of becoming self-employed or a starting a completely new choice of career. Whether you are starting out on your own or changing employer it is important to make sure you are aware of your rights and obligations.
Becoming self-employed.


The pros:


  • You are responsible for generating your own income and can retain what you earn (once you have paid any costs and expenses).
  • You only pay income tax after you have earned more than your personal allowance and business expenses are deducted (specialist tax advice should be sought regarding income tax and tax deductible expenses).
  • You control your own hours and working pattern and are only answerable to yourself.
  • You decide where you work and who you work with.
  • The business is led by your vision, dreams and ideas.

The cons:


  • No guaranteed regular income and pension contributions.
  • Being a sole trader means the law does not distinguish between you and your business and you will be liable for the business’ debts. However, this can be avoided by setting up your business as a limited company or a limited liability partnership. You should seek specialist advice on the best way of trading for you.
  • You lose your entitlement to statutory benefits like holiday pay and sick pay. If you are not able to work the business will stop.
  • There will be peaks and troughs in your income and you need to prepare for this.
  • The responsibility for paying your income tax and National Insurance contributions falls to you, but you can outsource this to an accountant.

Career Change.


Whilst moving to a new employer does not involve setting up a new business and taking on the risks associated with being self-employed, there are still a number of things to be aware of. It is important to provide your existing employer with the correct notice in accordance with your contract of employment. Failing to do this could lead to them taking action against you.

Before handing in your notice, review your contract of employment to check for any obligations you will have to your employer following the termination of your employment. It is common practice for employers to include post termination restrictions in contracts to stop employees from soliciting staff, dealing with clients and customers and working for any direct competitors for a period of time after they have left its employment.

Make sure you update any public profiles such as your Facebook or LinkedIin profile to show you have changed employment and are not holding yourself out as still being employed by your previous employer.

It is also important to consider why you are leaving. Is it for a new opportunity or has something your employer done forced you out? If you feel like your position has become untenable and that you cannot continue to work for your employer, then you may have a claim for constructive dismissal and you only have 3 months minus 1 day to pursue the claim in an Employment Tribunal. If this is the case, do not delay in taking specialist legal advice.

If you need any further advice on the issues raised above do not hesitate to get in touch with one of our specialist employment lawyers on 0114 275 5266.

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