It is all too easy for smaller businesses to see HR as an unnecessary expense.  All businesses have employee issues.

As a small business you may not realise you have them and to what extent.

Prevention is better than cure, so businesses that embrace HR, seeing it as a cost benefit rather than an expense will have far less employee issues and find the savings made vastly out way the costs of putting in place formal HR system and processes to start with.

1.     Absence management policy and systems

On average a typical employee will take an average of 6.4 sick days per year at an average cost of £568, if you have 10 employees that’s over £5000 each year, over a 10 year period that's over £50,000.00.

The implementation of formal absence reporting, monitoring & management systems can reduce absence levels and minimise the direct impact absence has on the businesses bottom line.

With any type of absence management there is a fine line between being legally compliant & finding yourself in tribunal facing claims of disability discrimination.

2.     Up to date contracts of employment

With effect from April 2020 all employers are now legally required to give all employees formal contract of employment from day one.

Some businesses fail to realise the need review or update their contracts and a contract issued 2, 5, 10 or 20 years ago may no longer be relevant to current business needs. Do your current contracts give you the right to:

• Make variations to the employees contract
• Place you employees on short term working when times are hard
• Layoff your employees for short periods when business is slow
• Make your employees keep your business confidential
• Vary the location for work from site based, to remote homeworking

Having up to date contracts of employment in place will improve employee relations, save the business from avoidable and costly contractual disputes and give your business flexibility to make changes when the business needs to.

Failure to issue a formal contract of employment from day one can result in a tribunal awarding 4 weeks basic pay, against the employer.

3.     Disciplinary / grievance policy & procedures

By law, all businesses with employees regardless of size, must have in place a formal disciplinary and grievance policy.

Furthermore, businesses must be able to demonstrate that these have been clearly communicated to all employees.

Failure to do so can result in any action taken against an employee being deemed to be automatically unfair by a tribunal, resulting in an award against the business. Plus up to an additional 25% uplift in the any award.

4.     Staff / employee handbook

Whilst there is no legal obligation to have a staff handbook, it can be a false economy not to put one in place as the short-term costs vastly out way the long-term time and cost savings.

A staff handbook clearly defines what the employee’s rights are and their obligations toward the business, and helps establish a clear process to manage employee relations.

A well written, legally compliant employers staff handbook will:

• Give employees a clear understanding of the businesses expectations and the working relationship
• Acts as a management guide to help managers stay on the right side of UK legislation and HR best practice
• Help protect the company from potential future claims of unfair dismissal, age, race, sex discrimination, unlawful deduction of wages etc.

If you have to tender for business you may well be asked to supply:

• Equal Opportunities Statement
• Modern Slavery Policy
• Anti-Bribery Policy
• GDPR Policy

Without these you may well be missing out on securing valuable revenue streams for your business.

5.     Access to HR advice

Many small businesses work on the basis of “that’s the way things have always been done”.

Times have changed and so have the legal requirements. Regardless of the size of your business you need to ensure you do things the correct way and stay on the right side of the law. 

Employment law and HR practices are regularly changing. Not keeping pace with such changes by adapting your current formal process can lead to you losing a claim against you because of a simple technical error.

Gaining formal HR advice at the earliest opportunity and applying it may save you thousands of pounds in tribunal rewards and lost productivity.

KeyHR offer a retained consultancy service where for a monthly fee, business can access direct professional HR legal advice whenever they need it. Find out more

6.     Development of your management team and employees

When there is an employee issue, managers are often expected to “sort it”. But have you provided them with access to training or coaching to ensure they have the skills necessary to deal with employee issues.

Managers not having the correct skills to deal with employee relation issues can be more costly than not addressing the situation in the first place, as they may not understand the process, and unwittingly end up placing the business in court due to avoidable mistakes.

Something as simple as not giving the correct notice for a meeting, or having a break in a formal meeting can result in any action taken being deemed unfair in the eyes of the courts.

It is equally important to develop and educate your employees as to what is acceptable and unacceptable behaviour. What some employees may label as “banter “or a “bit of fun” may result in your business being in court facing unlimited fines for knowingly allowing discriminating conduct or practice in the workplace.

A management team that has received training on the company’s policies and processes to enable them to respond to employee issues will ultimately increase productivity and help reduce turnover levels save time and money.

7.     Equality and Diversity Policy /Equal Opportunities Statement

These 2 documents evidence a business is following legal compliance requirements, but a failure to have well-structured policy and statement can result in claims being brought against the business via an employment tribunal.

A clearly defined, well disseminated equality and diversity statement and policy will help define the type of employer you are, how you are perceived by not only your employees, but also within your market sector and by your customers.

It can enable you to attract / retain good employees and secure additional revenue streams (outcome of successful tendering application).

8.     Checking employees right to work in the UK

Since the UK left the EU in January 2021 the right for EU citizens to stay and work within the UK has changed.

Current EU nationals working within your business (prior to 31 December 2020) many no longer have a right to stay and work within the UK.

Failure to correctly check and keep adequate records that your employees have a right to work in the UK could result in a £20k fine per illegal employee. 

9.     Formal Induction

In any business it is vital that you get new employees up to speed at the earliest opportunity.

That does not mean throwing employees in at the deep end, as this will often prove to be counterproductive. 

What many businesses don’t realise is an employee’s first day is probably the company’s most important day.

A formal induction process will ensure your new employee has a positive first experience of the business and means the employee will:

• Settle into the business more quickly
• Fully understand the organisation culture
• Clearly understand their obligations toward the company
• Learn the job role correctly in a structured manner
• Become more productive and effective in the job role more quickly
• Know where to get help and support when needed
• Be more likely to raise issues, concerns or mistakes
• Be less prone to make mistakes and more willing to highlight them when they are made

The lack of a formal induction process often leads to failed probation periods, higher turnover of staff, additional recruitment costs and further loss of productivity.

A formal induction process once setup, will give your business a consistent approach to how a new employee is treated, and the information given to them. Increasing the speed it takes for a new starter to engage, contribute and become productive.

10. Anti-Bribery Policy

A small business may not feel this applies to them, but this may not be the case and perhaps you should think again.

Do your suppliers or customers give your employees gifts or gratuities?

Are your employees obligated to declare these to the company? If not, it may be costing your company thousands without you even realising it.

Are employees giving the majority of work to just a handful of suppliers who provide incentives such as bonuses or gifts for value of orders placed or Christmas gifts?

Do you have sales staff or sales representatives that are allowed to give discounts or extras to customers to secure a deal or contract?

• Are these discounts given in line with company guidelines?
• How do you monitor if they receive a gift or gratuity from a customer?
• Do you require them to declare it to the company and if so, are they allowed to keep it?

On a moral level, are all your employees treated the same or do only employees who are customer supplier facing get to keep any gifts or gratuities?

Without more formal control measures in place such as Anti Bribery Policy it will be hard for a business to take action against an employee it deems is abusing the system for personal gain.

When tendering to supply customers with products or services, they may well require confirmation of your Anti-Bribery policy to ensure they are clear what is permitted.

Furthermore, it can help reduce the businesses liability with the Inland Revenue as the business can demonstrate its position in relation to gifts and gratuities and what has to be declared for tax purposes.