What first-time business owners need to know about HR

Overlooking these fundamentals could put even the best franchisees in hot water

Starting a franchise, you may or may not have HR support or specific guidelines to follow. And if you don’t, how do you know where to begin?

As soon as you’ve hired one employee, you move from being a ‘business owner’ to an ‘employer’, and as soon as you’re an employer, you’re not only responsible for other people, but you’re also subject to employment law. So, HR is something that needs to be considered, and addressed, right from the beginning of a new business journey.

Essential documents

It doesn’t matter how small or new your business is, if you don’t have certain documents and policies in place, then you are in breach of the law, and without them, the business is vulnerable to legal action.

From day one, legally every company needs three specific HR policies on file:

• A health and safety policy
• A disciplinary policy
• A dismissal and grievance policy

There are free templates available online for all of these policies. HSE (the government’s health and safety body), the CIPD (Chartered Institute for Personnel and Development), or ACAS (the Advisory, Conciliation and Arbitration Service) are all good places to start.

As well as these policies, you also need to ensure that you have:

• Employers’ liability insurance. Every employer in the U.K. needs valid employers’ liability insurance. It’s designed to cover you in case one of your team becomes ill or injured carrying out their work for you

• Right to work documentation. Employers have a responsibility to keep a record of their employees’ right to work documentation. For team members from the U.K., that’s pretty straightforward – just keeping a scan of their passport will do the trick

• GDPR. You must comply with GDPR laws regarding any information you hold on file about your employees (such as their right to work documentation). Using some kind of HR software is usually the easiest way to ensure you store your employees’ data safely and compliantly

• Written statement of employment particulars. It’s best practice to provide your employees with an employment contract by the end of their first day, at the latest. But at the very least, as part of their statutory rights, you must supply a statement of their basic employment particulars

• Pensions. Under the Pensions Act 2008, every employer in the U.K. must put certain staff into a workplace pension and make contributions to it. You can check up on your company’s responsibilities by heading to The Pension Regulator.

Scale sensibly

These policies and documentation are some of the minimum HR things a business needs, but once you have the basic legal stuff ticked, and as your company grows, it’ll become more and more important to build out other policies within a staff handbook.

Your staff handbook should contain things ranging from necessary documents, to instructions and guidelines, and any extra benefits you offer to help improve your employees’ experience. Such as:

• Annual leave. What do you offer? And what’s the process for employees to follow to take annual leave? How do you make sure you don’t have any leave clashes and you stay adequately staffed?

• Sick leave and sick pay. How do you record and manage illness?

• Remuneration. What tools do you use to track employee time to ensure staff are paid accurately?

• Career progression and development. What’s the process for promotion?

• Performance management. How do you deal with an employee that’s underperforming?

You’ll need to make decisions about all of these things, and put processes in place to manage them, within the first few months of starting your business.

Having the HR basics nailed is not only a legal requirement in many areas, but it also says a lot about you to your employees. It shows them that you value their time and work, and strong HR will attract the best to work for you, and retain staff to your business in the long run.

Top three biggest mistakes that first-time business owners make

Being ‘accidentally’ discriminatory

You need to make sure you’re aware of equal opportunities legislation so you avoid discriminating against anyone on the basis of a protected characteristic. You cannot discriminate against anyone based on age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, and sexual orientation.

New business owners can sometimes fall into the trap of being ‘accidentally’ discriminatory. For example, if a business owner advertises for ‘mature’ staff, they may just mean a mature attitude, but they could fall foul of age discrimination. Take some basic equality and diversity training before starting to recruit your first employees, as discrimination law applies from the job advert onwards.

Not understanding working time regulations

First-time owner-managers wear a lot of hats and often look after logistics like employee scheduling and planning rotas – and many don’t know the law when it comes to the maximum amount of hours an employee can be scheduled for.

As well as governing things like minimum amounts of annual leave, working time regulations also state that an employee cannot work more than 48 hours a week (although they can opt out in writing) and that they are legally entitled to an in-work rest break if the working day is longer than six hours, and at least 11 hours of consecutive rest each day. So for example, if an employee works until 8.00 pm, they cannot be scheduled to work again until 7.00 am the next day.

Trying to do it all

So many small or first-time business owners try to do everything themselves but when it comes to people management there is a huge amount to consider and keep track of. It might not make sense to hire a full-time member of staff to handle your HR but get help early on. Whether that’s retaining a consultancy for a certain amount of hours each month, or bringing on board software tools that can automate some of the work and take some of the burden. Doing everything yourself isn’t sustainable, especially if you want to grow.

The author

Pam Hinds is the head of people and staff management at software provider RotaCloud