It's all too easy to put off the business of HR when you're trying to keep a startup or small business afloat, but you do so at your peril. David Mellard offers some top tips
This article was first published in the June 2017 UK edition of Accounting and Business magazine.
Running a small business is hard work. When you are the CEO, IT fixer and tea-maker it is common for HR stuff to be forgotten. But you can’t afford to ignore it, as you leave yourself open to the risk of upsetting or inconveniencing your staff and, in the worst cases, to nasty claims at an employment tribunal. Sorting the HR basics now will save you time, money and hassle in the longer term.
First off, when setting up contracts for your staff – not optional – you need to define their employment status correctly: are they an employee or contractor? Employment status is complicated, as it falls between employment law and tax law. You will have to pay up-front for these contracts to be developed accurately, but once you have a template of your company’s terms and conditions, you may be able to use these for future employees.
Together with the employment contract, HR policies form part of your employee’s written terms of employment. This should include benefits such as pensions that your employees are entitled to, arrangements for when they are sick, what happens when employment is terminated, and the processes for disciplinary, performance and grievance issues.
Having a handbook with these processes set out and shared with your employees means that not only do you have a good foundation for managing your employees within the law, you also mitigate the risk of being taken to an employment tribunal. You need to get these policies in place as a foundation, and it’s worth the investment, as a good document will apply to the whole organisation and should last until any big changes take place.
All organisations (even those that only employ one person) must make a workplace pension available. Most small organisations will have their staging date for auto-enrolment in 2017. Check the Pension Regulator website using your PAYE code.
It is advisable to start planning at least six months ahead to make sure you’re compliant with all processes, can integrate with payroll and can talk to employees about what to expect. It’s also important to understand the different employer contribution levels (particularly if employees work on commission) and how employees can choose to opt out. Companies can be fined for missing their staging date or for non-compliance. The government has provided a free pension provider, NEST, which is a good option for smaller businesses.
It’s also important to understand the new(ish) Shared Parental Leave legislation. Despite being very important for society, this legislation has a reputation for being complex.
It allows parents to share statutory leave and pay when their child is born, or if they adopt. It can be taken separately or simultaneously and in continuous or discontinuous blocks. If employees request to take this in discontinuous blocks, it will take careful business planning.
The basics of the legislation are explained at bit.ly/spl-keyfacts. Make sure your staff handbook has reference to this policy and your employees know what they are entitled to.
All employees with 26 weeks’ service have the statutory right to request flexible working. In practice this means they can request a change to their working hours, term-time hours or place of work, or request remote working, job-sharing, a career break or compressed hours on a temporary or permanent basis.
You don’t have to approve their request, but you must consider it, discuss it with them and make a decision promptly. You can reject requests for business reasons (see a full list), but remember to explain your decision fully and wherever possible try to accommodate requests if they are reasonable.
David Mellard, CEO and founder of Bedrock HR
"You can leave yourself open to the risk of upsetting your staff and, in the worst cases, to nasty claims at an employment tribunal"