Not breaking the law is a good starting point if you are looking to successfully run your own organisation. That said, few business owners are aware of all the exact steps you have to take in order to meet legal compliance when you set up your own company. This is especially true when it comes to human resources, since the risks are much higher when it is not just your own business that risks incurring damages but also the livelihood of others.
What is compliance?
Legal compliance is about being aware of and taking all of the necessary steps to meet the standards set by a rule or a law. Being legally compliant is an important step in taking your company or business seriously and recognising it as an entity that is important enough to interact with and be governed by the world at large.
As an employer you have a duty of care to your employees to protect them and the work they do against regulatory risk. You also have the responsibility to provide for them without exploiting them. This can easily be achieved by researching, following and obeying industry regulations and government legislation. Employment laws exist to protect people and their fundamental interests, be they psychological or pecuniary. There are good reasons why you cannot pay someone £2 an hour in the UK or why you cannot make someone change their contract to one that stipulates they work 60 hours a week every week. It is in both the employee and the employer’s best interest to not fall afoul of these legal standards.
Failure to do so will open up the possibility of fines, employment tribunals, and potentially the end of your company. This is because the damage done to your business’ reputation may be far more significant than any financial punishments. It is all too easy to see the long list of standards and regulations that you have to meet as simply representing “red-tape” but they exist to protect the business and the employee alike when no wrong deeds are being committed.
Legal compliance in HR
As soon as you hire your first employee there are legal standards that you will have to meet. Standards of HR compliance in the UK include providing the employee with a contract of employment (or at least a ‘written statement of employment particulars’) within 8 weeks of them starting their role. It is worth noting that in order to take you to court as their employer, the employee does not have to have a written contract.
Your company will also have to have at least three HR policies in place in order for you to run it as a legally compliant business. HR policies provide you with the guidelines to confront and resolve personnel-related concerns. When something goes wrong, you do not want employees not knowing who to turn to or feeling like they are being treated unfairly, worse still, you do not want anyone towards whom you have a duty of care feeling unsafe in their place work.
In order to avoid these issues, you will have to have thought out and spelled out your disciplinary procedures, which allow all members of staff to have their performances evaluated fairly and consistently; a grievance policy, which allows employees to comfortably raise concerns about the company or the work-place; and a health and safety policy which ensures that none of your employees will come into any preventable danger while in the office.
Discrimination in the workplace
A more obvious example of legal compliance in HR, but always worth bearing in mind is the avoidance of discrimination in the workplace. As a business owner, it is your responsibility to make sure that everyone who works for your company is aware of the protected characteristics. Thanks to the Equality Act of 2010, age, disability, gender reassignment, marriage or civil partnership status, pregnancy and maternity, race, religion and belief, sex, and sexual orientation are all covered by discrimination law to protect people from being treated unfairly.
There are hygiene factors to consider too when considering where your company’s HR needs to be legally compliant. Do not break the contracts you draft for your employees, for instance fire people like a grown up, being sure to pay them throughout their notice period and for any unused holiday days. Make sure everyone on staff is earning national minimum wage or above for their age level. Be certain that there is no one on staff working more than 48 hours every week who has not explicitly consented to doing so. Try your very best to allow staff to take leave when they ask for it. Recent changes in the UK law also mean that all of your employees have to automatically enrolled in a pension if they are over the age of 22 and earn more than £10,000 a year.
While being on top of all the above policies and procedures is essential to running a legally compliant business, you should also always consult with an HR or legal specialist when drafting contracts, new policies or just have any concerns on these fronts. It is always better to be legally compliant than to be sorry.