Will 2025 be the year that your business reaches the milestone of 250 employees?
If so, congratulations, this is a pivotal moment in a business’s history and a key marker of its growth and success.
From a legal perspective, this milestone is also the trigger for certain legal obligations that need to be on your radar, together with some wider legal and commercial considerations to continue to bear in mind as the business grows.
Employment law imposes certain obligations on businesses at the point when the number of employees reaches the 250 threshold including, for example, annual gender pay gap reporting requirements. This requirement is due to be expanded in due course with the Government’s plan to require employers with 250 or more employees to also report on the disability and ethnicity pay gap within their businesses. This will run alongside a new duty planned under the Employment Rights Bill to require businesses to put in place a gender equality action plan to include measures to support employees through the menopause, which again applies only once the crucial mass of 250 employees has been met.
However, it is not just employment law that imposes additional obligations for businesses reaching the 250 employee milestone. Corporate law requires certain additional information to be included on the annual director’s report and relevant statements to be included in the director’s remuneration report. Data protection law requires more detailed record-keeping on data processing activities, and 250 employees is one of the relevant factors to determine your ICO registration tier and fee.
It goes without saying that as the business grows there are likely to be additional tax liabilities, but also some less obvious liabilities that come with growth that you may not have considered including increased insurance requirements and costs and, the likelihood that the responsibility for operating the off-payroll working rules will lie with the organisation rather than any intermediary.
Generally, it is important to note that there are, of course, other legal considerations which are relevant to businesses of all sizes. As a business expands, there is likely to be less leniency for non-compliance with legislation and the business will be expected to take more substantial measures to ensure compliance with the law. Consequently, the standards to which the business will be held accountable will increase with size.
Whilst not strictly linked to a particular threshold of employees, as the size and resources of the business increase, the accountability and expectations on the business in connection with any employment processes it carries out will be greater. A good example of this is the new duty on employers to take reasonable steps to protect its employees against sexual harassment, which imposes a greater onus in terms of the steps a business is required to take the larger it is in size. Further, the expectation that staff policies, and training, at all levels but importantly for line managers, is provided will be greater.
The Birketts view
As the business grows, auditing the businesses health and safety and other regulatory compliance processes to ensure that they are fit for purpose will be a must, as well as wider commercial considerations such as reviewing the businesses position in respect of its environmental, social and governance impact. It is also important to review employment contracts and policies, to ensure they are still fit for purpose and incorporate provisions to adequately protect business interests, including confidential information and intellectual property rights as well as non-competition clauses and other post termination restrictions that might be appropriate.
Experts from Birketts LLP regularly advise and help businesses navigate the additional legal requirements that need to be considered as the business grows so you can be fully prepared. From advising on all aspects of pay gap reporting to updating policies and processes to carrying out compliance audits, we can help.
We offer guidance and training for senior leaders to ensure that the jump to 250 employees and the associated legal compliance obligations and considerations are managed smoothly and the business continues to thrive.
If 2025 will be the year in which your employee numbers hit the 250 mark, be proactive and make ensuring that you are prepared for the legal implications of this milestone a new year’s resolution that you keep.
For further information do get in touch with Charlotte Sloan.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at January 2025.