Picture this: your company is finally off-the-ground and you’re ready to start looking for your very first employee.
You go to start the hiring process, but quickly find yourself with a lot of questions - where do you find new hires? How do you write a decent contract? What holiday benefits should they get? What happens if they’re not a good fit?
If you don’t already have a dedicated HR team, it can be hard to know as a business owner whether you’re staying on the right side of the law.
And who can blame you?
There are so many other plates you have to juggle; there are never enough hours in the day, you’re basically a one-(wo)man band, and resources are pretty scarce (if not non-existent).
Because you’re just starting out, you may think you don’t need to worry about the challenges of staying legal, but employment law actually applies to everyone regardless of size, industry, and years in the game.
We know you’re eager to get your startup off the ground and grow a talented team, but postponing getting the HR basics for small business right will just open you up to worse legal problems in the future.
The business world in general has several laws and legalities that HR leaders must follow to avoid fines and other penalties, but few small businesses are aware of the exact steps they need to take in order to meet legal compliance - not surprising really, when it’s not the most glamorous part of starting a business!
Making sure you’re on the right side of the law will help you protect your business. Getting it right means you can focus on what you really care about - growing a talented team and a successful company.
Heads up: employment law changes from country to country, so it’s best to check your own country’s laws and legalities. In this article, we’ll just focus on UK employment law requirements.
What is HR Compliance?
HR compliance is the way a company defines its policies and procedures to make sure they’re staying on the right side of the law and carrying out fair practices.
If you think the word “compliance” comes with a wodge of red tape wrapped around it, you’re not alone.
It’s easy to dismiss something we don’t understand, but this is something you can’t afford to dismiss.
While the law remains the same for everyone, the policies you put in place at your small business might differ from another small business just down the road. Being compliant also means ensuring your policies reflect your unique way of working. So, when you’ve covered the basics and adhered to legalities, you should customise your policies to suit your (and your teams’) needs.
Like other laws and legal requirements, employment laws are regularly updated, so it can be tricky to stay ahead of the game.
However, it pays to be well-versed in hiring and retention, and streamline ongoing legalities so you can easily protect your employees and your businesses’ reputation.
The ultimate goal is to find the “compliance sweet spot” where you meet all legal requirements while still making sure you hit your HR objectives.
Key Areas of HR Compliance
Human Resources compliance covers everything that makes your employees feel safe and valued (while at the same time protecting your business against any outside claims).
If you’re thinking salaries, holidays, and office hours, you’re absolutely right.
But there’s more to it than that.
The key areas you’ll need to include in your processes include:
- Compensation and employee benefits (like minimum wage, how much employees will get paid and what extras they’ll get: gym membership? A training budget? Health insurance? Bonuses?)
- Legal standards (employee contracts, HR policies to resolve personnel-related issues, and disciplinary procedures)
- Wages and working hours (like what your company office hours are, whether employees get overtime, and the total hours a week employees must work)
- Discrimination in the workplace (including age discrimination, adhering to anti-discrimination law and your procedure for handling any discrimination complaints)
- Employee time off (like how many days of holiday employees will get, whether they’ll automatically get Bank Holidays off, and how many consecutive days they can take off in a row)
How to be HR compliant
1. Have the Right HR resources and expertise
You’re probably keen to keep your expenses low as a new startup.
If you haven’t already started hiring a full team, what’s the point of having an entire HR department?
While you’re not alone in this thinking, it helps to get some kind of HR input right from the very start to save you having to go back and change your policies further down the line.
However, if you don’t have a full-time HR professional or Human Resources department in the company or aren’t in the market for one yet, you may want to outsource HR to make sure you’re doing the right thing. CharlieHR’s HR Advice provides on-demand advice on compliance issues and HR legalities from an expert. Live HR support for small businesses from your own personal advisor will provide you with everything you need to be compliant without paying over the odds for a dedicated HR person in your company.
It’s also a good idea to start building up your HR compliance software suite, which will include tools like onboarding software and time-tracking software. Again, this makes sure you’re doing things right from the start so you’re not having to backtrack later on.
2. Create 3 specific HR policies
For any small business to be HR compliant, they need to have three policies in place:
- Health and safety policy
- Disciplinary or dismissal policy
- Grievance policy
Everyone has to do this - it’s a non-negotiable.
Without these policies, your business runs the risk of being non-compliant and facing serious legal action.
CharlieHR’s dedicated advisors are pros on these three policies and can help you create or update your policies to ensure they’re compliant.
If there’s one thing you do, make sure it’s this.
For more detailed information on the three policies and what they include, download our guide here.
3. Create an Employee Handbook
Your start up employee handbook is the Holy Grail of your company’s policies, even the ones that aren’t required by law.
It’s the place where all your policies and procedures are laid out for team members to access any time they want, and it needs to be regularly updated to ensure you stay compliant in the long-term.
As well as writing out everything so that your employees are in the loop, it helps to make your handbook accessible to everyone who needs it - whether that’s through your company portal or whether you send it via email to every new hire.
Having a company handbook isn’t a legal requirement as such, but it’s good practice to fill everyone in on your procedures and policies. And, if any questions crop up, you can always defer to the handbook for your answers - it makes life much easier for everyone involved.
CharlieHR’s HR Advice experts can help you create your company policies and put them together in a dedicated company handbook. They take the hard work and effort out of a difficult task so you can focus on growing your business in other ways.
4. Check you’re compliant at every step of the hiring process
Non-compliance issues can quickly crop up when small businesses start hiring and growing rapidly without any solid process in place. Having no process or policies in place paves the way for legal issues that can happen before, during, and after you’ve made a new hire. This is why it’s critical to make sure your business is compliant throughout every step of the hiring process.
There are multiple steps in the hiring process (not to mention the ongoing care that employees need to make sure they’re happy and healthy members of your team).
Each step requires a certain level of compliance, and going through each step in a checklist-style way can help you stay legal.
The interview stage
Consolidate your interview procedures and questions, and determine how you’ll check references.
The hiring stage
Firm up your offer letters, new hire paperwork, and write legal contracts.
CharlieHR’s dedicated advisors can help you set up your hiring process to make sure it’s compliant but also fair to the candidates. This is crucial in protecting you from legal actions as well as building a good reputation and a culture of transparency.
Your advisor will also help you create a contract that reflects your company’s identity and tone of voice (something that a lawyer wouldn’t do).
Ongoing HR Tasks
Ongoing tasks include checking and storing employees’ Right to Work information (which you can safely store in CharlieHR’s software) and getting Employers’ Liability Insurance.
If you’re feeling overwhelmed and bogged down with the little, repetitive tasks that come with running a small business, CharlieHR’s HR Advice can help you complete general compliance checks or write up a personalised HR compliance checklist.
Even if your company already has contracts, policies, and a handbook in place, you can still have an advisor check that everything is up-to-date and follows the latest regulations with an HR compliance audit.
New HR law is released every year around April, and keeping up can be a full-time job in itself. Having an advisor in charge of this who can flag when something needs changing can give you peace of mind.
CharlieHR client Fiit knows exactly how this feels:
“When we found ourselves in difficult situations, we were able to reach out to the HR Advice team to understand what we needed to do to treat people fairly, and also to be compliant with rules and regulations,” says Ben Wharfe, the Chief People Officer at Fiit.
"We felt reassured we were doing the right thing, the right way."
The ongoing stage of HR compliance will also include one-off tasks like making one person redundant, HR compliance issues or isolated incidents. It’s actually very easy and common for companies to unconsciously break the law when making redundancies simply because it doesn’t happen very often.
Taking HR compliance one step further
Now you’ve got a taste for HR compliance, you might want more.
Successful companies don’t stop at what is required by the law. Sure, you have to make sure you’re compliant in the first place, but you can use that as a springboard to outline and create policies that will keep employees happy and healthy during their time with you.
If your goal is to make your company a great place to work, going above and beyond legal HR compliance requirements can help your team feel safe, secure, and valued at all times.If you’d like to learn more about how HR Advice can help with your HR, book a call with us today.
Perhaps you could also have a look at our free HR Checklist for Startups to make sure you don't forget anything.