Revealed: Answers to 7 common HR questions [from business owners]

26th January 2018

Confused about your HR responsibilities and what you actually need to know as an employer? I share my answers to the 7 most common questions I get from business owners about all things HR and the law

1. What are the biggest HR mistakes that small business owners make?

Many business owners make mistakes because they lack the HR knowledge needed or they just don’t have (or make) the time for HR stuff, which I completely understand. But with the worst fines being imprisonment and unlimited fines, it’s more important than ever that you take proactive steps to protect your business. Here’s some of the most common mistakes that I see. 

  • No Employment Contracts
  • No HR Policies
  • Not having employers liability insurance
  • Not checking references, qualifications or the right to work when you hire someone
  • Firing someone without going through a disciplinary procedure first.
  • Not taking employee complaints seriously
  • Not nipping poor performance in the bud

Here’s some tips to help you avoid these mistakes

2. How much does it cost to get HR advice?

It very much depends on who you talk too. You can call the ACAS helpline for free, but many of my clients tell me they just get generic advice or have to wait a while to get an answer.

I offer a pay as you go HR advice line, where I provide advice to solve a range of problems. Often you want urgent advice, so I’ve set up my service so you can choose your preferred date and time before you pay, so you know you’ll get help soon. There’s nothing worse that paying for something and then having to wait weeks to get the advice you so desperately need.

If you just have a quick question, then you should join my free (and secret) Facebook group for UK entrepreneurs and small business owners. I’m very active and this is the best place to ask me a quick question. I also do a live Q&As so I can answer questions with a bit more detail. Click here to join. 

3. How can I avoid hiring the wrong person?

You do really need to invest time into the hiring process to ensure you avoid hiring the wrong person.

There are 5 important parts to the recruitment process that you really need to get right.

  • Defining the skills and behaviours you need and the type of person that will thrive in your company environment
  • Creating a compelling job advert
  • Asking the right questions at interview
  • Carrying out pre-employment checks. Do they have the Marketing degree they said they had. Did they really work for Amazon in the role of Marketing Manager of the last 5 years.
  • Ensuring you build a get out clause, just in case you get it wrong and the person isn’t what they appeared to be

Here’s some additional tips to help you with this. 

4. What are the main reasons that employees sue their employer and how much would it cost me if the worst were to happen?

Last year (1 April 2015 to 31 March 2016) a total of 83,031 tribunal applications were made. That’s a lot!

The highest sum awarded in a tribunal claim was £1,762,130, which was for a sex discrimination claim. This is when you are treated differently (badly) because of your sex. This kind of fine can bankrupt even the most financially stable company.

Now before you start panicking, I want to assure you that in my experience, most people don’t want to sue you. They do it because they feel they’ve been treated badly. And when I say badly treated, this could be anything from them feeling bullied through to them feeling unfairly treated. It’s their perception – not always reality.

Here’s the most common reasons that employees sue their employer.

Unfair Dismissal 

In its simplest form, unfair dismissal is when your employment contract is terminated and your employer did not have fair reason to do so. It can also be claimed if you did have a good reason to fire the individual, but you didn’t follow the right procedure i.e. the disciplinary process correctly. The highest award for an unfair dismissal claim was £470,865 but the average award for unfair dismissal was £13,851

Discrimination 

The act of employment discrimination can take many forms. Generally, it occurs when an employee or job applicant is treated unfairly because of their race, gender, nationality, religion or beliefs, age, sexual orientation, status or class, disability, gender reassignment or familial status (pregnancy, specifically). The highest sum awarded in a tribunal claim was £1,762,130 and was awarded in a sex discrimination claim.

Breach of Contract

A breach of contract is where the terms in the contract are broken, because they are not followed e.g. you change someone’s job or reduce their salary or don’t pay them travel expenses.

If you want information on how to AVOID getting sued, click here read my ‘Don’t get sued’ blog. 

5. Is it best to hire an employee and contractor?

Choosing whether to hire an employee or contractor really depends on how you want to work with the individual. For example Marketing Managers, HR Managers, Virtual Assistant’s and Admin Assistant’s could fall into either category.

If we take the example of a Virtual Assistant, you should be asking questions like: Does the virtual assistant have her own company name, work for you on a project-by-project basis, and operate independently with limited supervision? If so, then it’s likely that she is a contractor. However, if she works for you forty hours a week and you are her only client, it would be more like an employee.

So if you want:

  • Someone who will give you a long-term commitment
  • More control over the hours of work and over how tasks are performed,
  • To pay less as an hourly rate, in return for offering greater job security
  • To train the person to do work your way
  • Someone who’s part of your team – i.e. they attend your team meetings

Then it sounds like hiring an employee is the right way to go….

However, it may be better for you to hire a Contractor if you want:

  • Low commitment – you just need someone to do a job without committing to a salary, benefits etc.
  • Greater  flexibility. When you work with an independent contractor and it isn’t a good match, you simply don’t hire them again. When you have an employee that doesn’t work out, you may need to fire them, which isn’t always easy.
  • A remote / specialist service – you can hire the right person for the task needed, so you don’t need to train them or have them working from your office.

I’ve written another blog which has a lot more detail called Confused about hiring employees vs. contractor? Here’s why it REALLY matters! Click here to read it.

6. What do I need to include in my employment contracts?

There are aspects to this. What you need to include to meet your legal obligations and then what you should include to protect your business and minimise risk if things go wrong.

The essentials you need to include

To be compliant with the law, you need to include the essential information which forms the basis of the agreement. This includes:

  • The business’s name
  • The employee’s name, job title or a description of work
  • The employment start date
  • Working hours
  • Pay & benefits entitlement
  • Notice period
  • Holiday entitlement
  • Base location i.e. where the employee will work from

It’s also useful to make reference to topics like grievance, absence and disciplinary – of which there is also a legal process to follow. However, the details would ideally be in your employee handbook / HR policy handbook.

However, in order to protect your business, well-written contracts will cover some additional things.

These include:

  • A probation period – this is like a trial period in case things go wrong and it doesn’t work out
  • Protecting your intellectual property, like photos and documents etc.
  • Setting out what the employee can’t do during or after employment with you e.g. set pup in competition with you, work for your competitor etc.
  • Stopping your confidential information like trade secrets, sales turnover or customer list being broadcast all over social media etc.

In my shop I have a variety of DIY contracts that include the really important wording you should include. Each one comes with detailed instructions so you can tailor them for your business. Click here to view them.

7. Do I need to offer my employees a pension

If you became an employer on or after 1 October 2017, you must enrol all eligible staff into a workplace pension as soon as they start working for you. The exception is for any employees who are 21 or under, or earns less than £10,000 a year.

If you became an employer before that you would have been given a ‘staging date; which tells you when exactly you need to offer pension to your staff.

You must deduct contributions from your staff’s pay each month. In terms of how much it will cost you, you must pay at least 1% of your employee’s ‘qualifying earnings’ into your workplace pension. This will rise to 2% in April 2018 and to 3% in April 2019. Qualifying earnings means how much they earn – so this is more than just their base pay as it will include things like overtime and bonuses.

You can use The Pensions Regulator’s tool for employers to find out what you need to do and when you need to do it.

 

What do you think? I’d love to hear your thoughts in the comments.

 

 

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