The Risk of Informal Agreements: When Flexibility Becomes Vulnerability

Leading with Kindness (Without Losing Control)

If you run a wellbeing business, you probably started out valuing flexibility, maybe you still do. Most of us in this sector remember what it's like to be boxed in by rigid rules and faceless policies. So, when it comes to building our own teams, we want to do things differently. We want to trust people, offer freedom, and avoid anything that feels corporate or cold.

But here's the catch: informal agreements may feel kind, but they can leave everyone, yourself included, vulnerable. Let's talk about how flexibility, handled without structure, can backfire, and what you can do to protect your business and your people.

Why Informality Feels Natural (& Why It's Risky)

When you're building a practice from scratch, it's normal to ask a friend or fellow practitioner to help out with a few extra clients, or to agree a pay rate with a freelancer over a coffee. You're not running a big corporate, after all. But as your team grows, these handshake deals and friendly favours can create real headaches:

• Role confusion: Is someone an employee or a freelancer? The law cares less about the label and more about how the relationship actually works.
• Payment disputes: When arrangements aren't written down, misunderstandings are almost inevitable.
• Flexibility fatigue: Constantly adjusting terms for each person becomes exhausting and can feel unfair to others.
• Legal risk: If someone later challenges their status or pay, you may have little to fall back on.

Photo by Yan Krukau

Real-World Example

Take "Emma," who runs a yoga studio. She started by bringing in a couple of trusted instructors to cover classes as needed. They agreed on rates informally, sometimes swapping classes, sometimes paying cash. As the business grew, so did the team, but the old ways stuck. When one instructor decided she wanted formal employment rights, things got complicated. Without written agreements, Emma had to scramble to prove what was agreed, and ended up facing a costly dispute.

The Difference Between Employees & Freelancers

This isn't just HR jargon. In the UK, the difference between an employee and a freelancer comes down to:

• Who controls the work (you or them?)
• Whether they can send a substitute
• The regularity and exclusivity of the arrangement
• Who provides equipment and bears risk

If you treat someone like an employee, regular hours, set pay, clear direction, they may be entitled to employment rights, no matter what you call them.

Why Clarity Isn't Cold

Some founders worry that asking people to sign contracts or write down terms will make things feel less personal. In reality, clarity is an act of respect. It protects both sides:

• For you: It limits risk, sets boundaries, and makes it easier to manage change.

• For them: It gives certainty, builds trust, and avoids awkward surprises.

Remote & Hybrid Teams

With so many wellbeing businesses now operating online or in hybrid models, it's even more important to be clear about expectations, hours, and responsibilities. Remote work blurs lines, don't let it blur your agreements.

Diversity & Inclusion Angle

Clear, written agreements also support inclusion. When everyone knows where they stand, it's easier to avoid favouritism or unconscious bias. Fairness isn't just about pay, it's about process

Practical Steps for Heart-Led Leaders

1. Write it down: Even if it feels awkward, capture the basics in writing, role, pay, hours, notice, responsibilities.
2. Review regularly: As your business evolves, so should your agreements. Don't leave them gathering dust.
3. Be honest about flexibility: If you can't always say yes, be upfront. It's better than setting unkeepable expectations.
4. Get advice when needed: If you're unsure about someone's status, check with an HR professional. It's cheaper than a tribunal.
5. Use templates: There's no shame in using a template as a starting point—just make sure it fits your business.

Legal Updates

With the Employment Rights Bill on the horizon, the legal landscape is shifting towards more clarity and protection for workers. Expect more scrutiny of "informal" arrangements—now's the time to get your house in order.

Key Takeaways

• Flexibility is great, but informality can create risk.
• Written agreements protect everyone, don't rely on memory or goodwill.
• Clarity supports inclusion and fairness, not just legal compliance.
• Stay proactive as laws change, what worked last year may not work now.

Closing Thoughts

If you want your wellbeing business to thrive, don't let kindness become a vulnerability. Structure and compassion can, and should, go hand in hand.

Main – Photo by RDNE Stock project