Having some HR support isn’t about being ‘pink and fluffy’, robust HR practices are critical not only for developing your business but for protecting you from financial risk. Take note of the following common small business pitfalls and build in some structured processes and you could be protecting yourself against some of the biggest HR financial risks.
1) Conduct the correct ‘right to work’ checks. If you don’t do this and you are found to be employing a person that doesn’t have the right to work in the UK, you can be fined up to £20,000 for that person and for each person you employ illegally.
2) Supply a written employment contract within 2 months of an employee commencing employment with you. If you don’t, you could be taken to an employment tribunal and fined 2-4 weeks’ pay, or, if there’s a disagreement about the terms of employment that have not been put in writing, there could be a breach of contract claim, compensation for which can be up to £25,000 at an employment tribunal £50,000 at the High Court.
3) Beware of unfairly dismissing an employee. An employment tribunal can award the employee a year’s pay (up to up to £76,574) in compensation. Plus you’ll have to pay your employment lawyer’s fees (several thousand pounds) even if you win the case.
4) Beware of discriminating against an employee. There is no length of service requirement for employees to make a claim and a tribunal can award unlimited compensation.
5) Have legally compliant policies and procedures in place. If you’re taken to tribunal, it would count against you if you did not have the appropriate employment policy in place, potentially leading to larger compensation awards.
6) Prepare for and comply with the regulations on pension auto enrolment. If you do not meet your auto-enrolment obligations in time, or are offering pensions which do not comply with regulations, you could hit with fines of £400 to £50,000 (NB– the pensions regulator issued its first fines w/c 27/10/14!)
7) Don’t make the wrong recruitment choices. People are one of many small businesses biggest investments – getting it wrong can cost up to 3 times the starting salary.
Do worries like this keep you awake at night? We can help resolve your people and employment issues and help you to deal with your employer responsibilities professionally, legally and in a straight-forward way.
HRizon: dedicated HR support without the in-house cost
Contact Becca on 07551 007591 or email firstname.lastname@example.org