From the time that a business takes on its first employee, it needs HR. It will be informal at first and will be the business owner managing their employee, but even from day 1, there are legal obligations which a company owner is responsible for.
When a company takes on its first employee, the 5 basics which are legally required are:
- Contract of Employment (also known as a statement of main terms and conditions)
- Payroll – often outsourced to a bureau or your accountant
- Employers Liability Insurance – speak to your insurance broker about this one
- Pension – you have to enrol someone, even if they then opt-out.
- Health and Safety Policy – this only needs to be documented once you have 5 employees, but as an employer, you are responsible for the health and safety of your staff from day one of their employment.
People often think about HR as being a department in a large business, but HR is actually the process of managing staff and can be done by anyone – albeit, they do need to know what they are doing!
In terms of the question: Do I need HR? If you are referring to the professional advice involved in managing your staff correctly and legally, then the answer is yes!
How you get that advice is up to you as the business owner:
- You could take steps to educate yourself and to keep up to date with the current employment law requirements.
- You may have been a line manager previously with extensive experience in HR – this often empowers you to ask the right questions of your advisors. Not knowing what you don’t know is the biggest risk to your business.
- You could use a solicitor who will give you a legally compliant framework, but it is unlikely to be fully customised for your business needs and is quite often written in legalese – which even managers struggle to understand, nevermind the employees to whom the terms apply.
- Outsourcing your HR needs on an ad hoc or retained basis is a way to access the advice you need when you need it. This is usually bespoke and if you work with the right HR consultant or HR practice you will establish a good relationship with your provider who really gets to know you and your company.
- Another option would be to use a helpline – there are lots available from your professional body, the FSB, your bank or large call centres. Most of these are insurance led and therefore very conservative in their advice, reactive and off-the-shelf. They will tell you the law and how to stay within the law at all times, but this does not always give you flexibility. If you decide to ignore or do something slightly different from their set path, their insurance is null and void.
Unfortunately, some of the most complicated employment tribunal cases occur when the employer has done what they thought was the right thing. It felt right. It felt supportive. It felt fair. But it was technically illegal and you have just handed the employee the ammunition to bring a claim against you and/or your business.
Do you need HR?
The short answer is yes.
The question you need to ask next is, How do I get the HR support I need?