Employment Law Compliance for Small Business

Posted on 4th May 2023

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Small businesses must ensure they are compliant by following specific workplace and employment laws. Both the business owner and the HR employees must have a thorough understanding of HR compliance to ensure staff are effectively managed in line with the law.

Hamid Bagherzadeh, Legal expert and Co-Founder of LegaMart explains: “It is common for startups and small businesses to manage HR within their own team, where we quite often see founders or CEOs taking this responsibility upon themselves. 

“Startups can often fall short of introducing the correct employment procedures, particularly as new businesses tend to operate with a flatter hierarchy. The key here is that HR policies and procedures can provide structure, control, consistency and fairness to all employees within a business. It is, therefore, crucial for small businesses to ensure they have established appropriate HR policies to guide employees.”

Hamid outlines the mandatory HR policies that all small businesses must have in place, according to UK laws:

Health and Safety Policy

This policy sets out the general approach of small businesses towards health and safety, explaining how the employer will manage health and safety in the business. It should state who does what, when, and how. If a business has more than five employees, it must have a written health and safety policy.

Grievance Policy

Employers must have a grievance policy in place to ensure every individual is treated equally in similar circumstances, and that issues are dealt with fairly and reasonably. Grievance policies outline a business’s processes and guidelines for filing a formal complaint regarding a workplace, job, and/or co worker dispute or issue.

Disciplinary and Dismissal policy

The purpose of a disciplinary and dismissal policy is to set up a step-by-step process which ensures fairness and outlines the rules employees are held to. A policy gives employers the opportunity to highlight issues employees can be disciplined for, and the guidance to deal with any breaches of rules fairly and consistently.

As well as the above mandatory policies, Hamid also recommends small businesses include the following HR policies in their processing:

1. Equal Wages

The Equality Act 2010 and the gender pay review have been set in place to ensure all employees are treated fairly and their wage is free from any bias. Small businesses should have a fair and regularly monitored equal pay policy with monitors employee wages. 

2. Flexible Working hours

Employers must ensure their employee’s working hours do not exceed 48 hours on average per week unless the employee has opted out of this right. By creating a working time restriction policy, employers can aid in protecting their employees’ rights from working excessive hours. 

This policy can also outline paid holidays, flexible working patterns, sick pay, and maternity and maternity leave. Having a flexible working policy in place will help small businesses to reasonably handle any requests and have the processes in place to deal with requests. 

3. Code of Conduct or Business ethics

Having a code of conduct allows small businesses to easily define their company culture, set standards and expectations for employees to follow, and lets customers know what the values of the firm are. By having a code of conduct in place, founders can create a level of transparency for a healthy business relationship.

4. Private Policy

Creating a private policy aids small businesses to protect customers from predatory data collection practices. A good policy will specify the legal basis with which the business can handle customer data, as well as what the rights of the customers are as a user of the service.