Top Tips to Help SMEs Ensure Compliance with HR Legislation

22nd September 2016

office staff meeting workplaceMany small companies, and in particular micro-businesses, do not have a dedicated HR specialist, but they still need to ensure legal compliance. In practice, many find this difficult and some are currently facing fines over pensions-auto-enrolment. These can amount to hundreds or even thousands of pounds a day.

As a leading supplier of HR software for small business customers in the UK, IRIS FMP HR & Payroll Software, soon to be IRIS FMP, keeps a close eye on the whole field of HR legislation and resources. Here we have put together some top tips to help small companies ensure they comply with HR laws and regulations.

One recent survey, commissioned by the Jobandtalent website and carried out by OnePoll, suggested that only 37% of SME owners feel they have a good knowledge of the various regulations concerning employment and are able to keep up to date with changes. This means nearly two thirds of small companies could potentially risk not complying with all of the relevant laws.

Auto-enrolment into pensions schemes is just one area where it is feared that many small companies could have difficulties. A small business which fails to comply by its “staging date” could face a £400 fixed penalty. If it still does not comply, it could face an “escalating fine”. These can range from £50 a day for micro-businesses right up to £10,000 a day for large companies, while even a firm with just over 50 employees could face a daily fine of £2,500.

So how can you ensure all your HR practices are fully legally compliant and avoid the possible pitfalls?

  1. Arrange Some Training – Even if you are not an HR professional, if you are employing staff it is very helpful to have some training in the basics. Acas provides “HR resources management for beginners” courses and there are also other providers offering a range of short courses on HR topics.
  2. Refer to Guides and Helplines – There is a huge amount of HR material published on the web, but it can be difficult to know what is up-to-date and not to be misled by old information which is no longer correct. Again, Acas can help here, with a number of free guides and a helpline. The Federation of Small Businesses (FSB) also issues various guides and factsheets and both Acas and the FSB have helplines available if you need more specific help or information over a particular topic.
  3. Issue Contracts to New Employees – If you are new to employing staff, it can seem daunting to issue a contract, but doing so is a legal requirement. There are various main issues that need to be covered, including the employee’s job title or description, normal working hours, pay rates and when the salary is paid, sickness and holiday pay. It is possible to get a template from Acas, or you may prefer to take advantage of a service offered by a reputable HR services organisation or solicitor, to ensure your contract covers everything necessary and is correctly worded.
  4. Carry Out Checks on Right to Work in UK – It is crucial to make sure staff have the right to work in this country. Companies or organisations that do not do this could potentially face hefty fines of up to £20,000 for each employee affected. Some HR experts suggest that the checks should be carried out after you have offered the job and had the offer accepted, to avoid any risk of possible discrimination claims.
  5. Draw Up Policies and Issue a Staff Handbook – Having policies written down and issuing a staff handbook might be practices generally associated with larger companies. However, this is also good practice for smaller companies, to explain clearly what is required from employees, covering areas such as health and safety and diversity.
  6. Be Clear on Who Is Responsible for HR Compliance – The OnePoll survey mentioned above found that a high number of companies do not have anybody with the responsibility for recruitment and complying with employment legislation. This means there is a much higher risk of getting something wrong. Even if you are not a big enough company to have a full-time HR person or department, it is essential to ensure all the processes are carried out correctly and that the right paperwork is issued. This can again mean getting an HR expert in to check processes and draw up staff contracts, policies and handbooks.
  7. Choose HR Software Geared to Small Business Needs: Having the right small business HR software package will make it much easier to ensure legislative compliance, because it will constantly be updated. You can also get help and advice from your HR and payroll management system

Because it is flexible and web-based, Amity is an ideal HR software for a small business, with updates being automatically applied so you can be sure it is always fully compliant. Auto upgrades and software enhancements are included, so no internal IT support is required.

Amity cloud based payroll and HR software packages are also fully scalable and can be priced per employee, making them highly cost-effective.

The use of self-service HR software removes some of the administrative burden for managers and improves visibility. Searchable self help is another advantage, helping staff to find the answers to questions about HR and payroll issues. Additional information can be provided via an online help or chat facility.

HR Software for Small Business – Click here to download an Amity product guide.