Why HR Policies are Important for Small Businesses


Why HR Policies are Important for Small Businesses | Modern HR

Employers with good HR policies know how valuable they are in helping them successfully manage employee issues.

There are many employers though who just never seem to get around to putting them in place in their business.

Employment law and HR good practice can be a bit of a minefield, granted, and I’m sure for many employers it’s a case of ‘you don’t know what you don’t know’, but that approach doesn’t go down well at employment tribunals I’m afraid.

If this is all sounding familiar, read on because I’ll explain here what you need to know about HR policies. Plus, if you still need convincing, I’ll be outlining some of the risks of not having them. 

What exactly are HR policies?

HR Policies are guidance documents intended for your employees and managers alike that cover a range of situations or issues that could arise during the employment relationship. They help your business communicate the expectations you have of the people you employ, and the types of behaviours you need for the business to be successful. 

There’s no one-size-fits-all approach as to how many policies you should have, as this depends a lot on how many employees you have. If you’re a small employer and you don’t necessarily want to go the whole hog and have an HR policy that covers every conceivable situation, then you can have a core few that include the important must-haves. You can always build on them from there. 

Apart from the legal requirement to have a health and safety policy if you employ more than five people, there’s actually no legal requirement to have HR policies if you’re an employer. However, I would advise all business owners which employ people to have them, and to make sure their HR policies are well written, compliant with employment law, well communicated and adhered to. 

These are the must-have policies that I’d suggest you have as the minimum if you’re employing people: 

These are examples of other HR policies you could have to complement the basic ‘must-haves’: 

  • Computer, email and internet use 
  • Whistleblowing
  • Drugs and alcohol 
  • Maternity, paternity, shared parental leave, adoption and parental leave
  • Compassionate leave
  • Redundancy 
  • Anti-bribery
  • Anti-bullying and harassment
  • Code of conduct
  • Conflict of interest
  • Expenses
  • Gifts and hospitality
  • Home working
  • Jury and witness service
  • Leavers policy
  • Religious observance
  • Reserve forces
  • Retirement
  • Smoking
  • Stress and well-being
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Why your business can’t afford not to have HR policies 

To put it bluntly, not having HR policies in place can get your business into a whole heap of trouble if you’re not careful. 

If you haven’t given any thought to policies, then you probably haven’t considered what your position is as an employer on certain employee issues and workplace situations. If you’re not sure, then neither will your employees and managers. This leaves too much room for assumptions and misunderstandings when managers deal with workplace issues, which can lead to unfair and unlawful treatment, and a lack of consistency.

Having policies in place can help you defend your business at an employment tribunal if one of your employees makes a claim against you. They can also help prevent situations escalating to tribunal. Tribunals are costly, time-consuming and can cause reputational damage to your business. 

Covering some of the must-have HR policies, I’ll explain here the risks of not having one in your business:

Equality and diversity policy

If you don’t make it clear, as in; write it down in the form of a policy, how can your employees be expected to truly know what is and isn’t acceptable behaviour in the workplace? 

This could be a real problem when it comes to the Equality Act which gives protection from things like discrimination and harassment. You might think it’s a no-brainer that someone you employ should know without you having to spell it out that they can’t make sexually inappropriate comments to a co-worker for example. However, if you don’t have an equality and diversity policy that clearly says you won’t tolerate this kind of behaviour, and you end up at a tribunal with an employee claiming harassment under the Equality Act, you will not be looked upon favourably by the judge. 

Disciplinary and grievance policies and procedures

If you don’t have disciplinary and grievance policies in place, how can you be sure your managers are handling performance or misconduct issues or employee complaints in a way that is consistent, and in line with the requirements of the ACAS Code of Practice on disciplinary and grievance issues?  All disciplinaries, grievances and dismissals must follow the process set out in the Code. 

If you dismiss an employee who then makes a claim against you for unfair dismissal, the tribunal will take this into account and could award the employee a bigger pay-out as a result of you not following the proper process. 

Having disciplinary and grievance policies which follow the rules of the ACAS Code of Practice means all performance and misconduct issues, complaints and dismissals are treated fairly, and they will be less likely to come back to bite you. 

Sickness absence policy

Without an absence policy it’s easy for your sickness absence rates to be higher than they need to be. Sickness absence reduces productivity, it puts a strain on co-workers who have to provide cover and can impact your bottom line. Having an absence policy means your employees know that attendance is something you take seriously and will be monitoring, and your managers will have guidance to help them manage long term sickness absence properly. 

Data protection policy

The upcoming new data protection legislation (the GDPR) means it’s increasingly important for employers to make sure their employees who handle personal data are trained and understand the new requirements. There are scary consequences for falling foul of the law, and you can help your business stay compliant by having a policy in place for employees that explains the importance of data protection, the new rules under the GDPR and their responsibilities. 

I hope this article has shone a light on some of the reasons why you should seriously consider having HR policies in your business.


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