21 May 2024

HR Compliance Basics

Human Resources compliance covers a broad spectrum of areas, touching on numerous aspects crucial for organisational adherence to legal and ethical standards. Below, are our 10 points, each addressing key elements essential for maintaining compliance within HR. 

10 HR Compliance basics

1. Start with the basic legal requirements: HR policies and employer's liability insurance

The first step to HR compliance is to protect your company, its assets, and your employees.

Begin by implementing the three mandatory HR policies essential for your business to operate smoothly. Many small businesses attempt to function without these, but this approach is insufficient.

These three essential policies are:

  1. Health and Safety Policy
  2. Disciplinary or Dismissal Policy
  3. Grievance Policy

Once these policies are in place, and have been drafted by an HR professional like The HR Branch to prevent any issues, you should consider obtaining employer's liability insurance.

Why is this important? There are several reasons, but primarily because it's a legal requirement in the UK, and it safeguards both you and your employees. 

2. Draw legal employment contracts and set the right employment statuses

Before hiring anyone for your team, the first priority should be to have legally compliant employment contracts in place.

This doesn't mean using generic employment contract templates from unreliable sources on the internet. We can help by providing you with templates or if you have a template already we can review it for you and ensure it meets all requirements. 

Employment contracts should be your top priority before starting the hiring process, as they provide legal protection. This is also why it's crucial to establish the correct types of employment status for your employees.

Take your time and make sure this is done properly before proceeding.

3. Create an Employee Handbook

Your employee handbook is the cornerstone of your company's policies, including those not mandated by law.

It serves as a comprehensive resource where all your policies and procedures are documented, allowing team members to access them at any time. To ensure ongoing compliance, it’s important to update the handbook regularly.

In addition to detailing all necessary information for your employees, make sure the handbook is easily accessible, whether through your company portal or by emailing it to every new hire.

While having a company handbook isn't a legal requirement, it is a best practice for maintaining transparency within your business. Consider implementing one before any issues arise.

4. Draw the right documents and procedures for your business

While it's been emphasised that having a grievance or disciplinary policy is crucial, it also entails numerous documents and procedures that must be developed.

Without a well-defined procedure, you're unlikely to respond promptly to issues that arise. Failing to follow legal steps, such as utilising a written warning template or establishing a training agreement template, could significantly impact your business, both legally and financially.

In cases involving gross misconduct or termination of employment, it's imperative not to mishandle the situation. Having a clear procedure in place is essential. Consider establishing a repository where all templates are stored, along with a detailed step-by-step process for every manager and HR personnel in your organisation.

Although these situations can be unsettling, they can be effectively managed with proper

5. Make your hiring process bullet-proof

As with all aspects of business operations, the absence of processes or policies sets the stage for legal complications, which can arise before, during, and after hiring a new employee. Hence, it's imperative to ensure compliance at every stage of the hiring process.

The hiring process involves multiple steps, alongside the ongoing support necessary to ensure employees' well-being and satisfaction within your team.

Each step necessitates a certain level of compliance, and adhering to a checklist-style approach for each stage can help maintain legal compliance.

During the interview stage, consolidate your interview procedures and questions, and establish protocols for reference checks.

In the hiring stage, solidify your offer letters, complete new hire paperwork, and draft legally sound contracts.

6. Think about wages and salaries

Legally, there are two key considerations regarding wages and salaries:

  1. Ensure that your team members receive at least the UK minimum wage.
  2. Ensure that they are placed on the correct UK tax code when added to the payroll.

These are fundamental requirements. Additionally, it's important to consider fair compensation for your team members, although not legally mandated. Doing so can provide a competitive edge in the job market. Consider conducting research or hiring an external consultant to establish a benchmarking process.

Regarding legal obligations, remember that once your workforce exceeds 250 employees, you are required to publish a gender pay gap report.

7. Be knowledgeable about potential redundancy processes

Facing redundancies is a situation no business owner wishes to encounter, but unfortunately, it's sometimes an unavoidable reality.

Rather than avoiding the issue, it's important to gain a clear understanding of what redundancies entail. The more you comprehend about the necessary steps and actions, the less daunting they will appear.

The process of making someone redundant is immensely challenging for the employee involved. As an employer, it's your responsibility to handle it with sensitivity and efficiency, minimising any additional stress or difficulties.

Moreover, there are numerous legal obligations to consider when a role becomes redundant. Understanding redundancy selection criteria is crucial to navigate these requirements and mitigate potential legal issues.

8. Set the right probation and notice periods

To streamline your hiring process effectively, it's essential to consider two key aspects: probation and notice periods.

A probation period signifies the duration during which team members are under assessment before their official employment commences. During this period, they enjoy the same entitlements regarding pay and holidays. However, if they fail to meet expectations, it's simpler to terminate their employment.

Notice periods, stipulated in the employee's contract, outline the duration of notice they must provide before resigning. These periods can vary based on the position. For instance, you might opt for a longer notice period for roles involving significant stakeholders.

Given the intricacies and various scenarios involved, it's crucial to ensure accuracy and comprehensiveness in addressing these aspects of the hiring process

9. Spot and handle discrimination in the workplace

Keep in mind that there are laws safeguarding your employees from discrimination. Whether it pertains to disability, age, race, or gender, it's imperative to establish procedures to identify and address any issues within your workplace.

10. Invest in your day-to-day HR compliance now

There are several actions pertinent to your day-to-day operations that haven't been covered above but should be included in another checklist:

  • Regular tasks encompass verifying and securely storing employees' Right to Work documentation and obtaining Employers' Liability Insurance.