A question for small businesses owners; are you always putting off your HR (human resources) responsibilities for your staff? Do you live by the “well nothing bad has happened yet” philosophy? You know you have certain legal responsibilities, but does HR always go to the bottom of the list? If this sounds familiar, you are not alone but that doesn’t make it right.
Ignoring employment responsibilities can be a very costly risk to take, with some penalties running into the thousands of pounds f you don’t protect yourself – Now I’ve got your attention, I thought it would be useful to share the most common HR risks small businesses face and just how much it can cost when it goes wrong.
Not providing an Employment Contract
- By law employers need to provide employees with a written statement of terms and conditions of employment (employment contract) within 2 months of them starting work with you. If you fail to do this you can be taken to an employment tribunal and fined 2-4 weeks pay.
- Any terms of employment that have been agreed with the employee must be put in writing or you are leaving yourselves wide open to disagreements that can ultimately lead to a breach of contract claim. A breach of contract compensation claim can carry a penalty of up to £25,000 if taken to an employment tribunal, or £50,000 if taken to the High Court.
- An employee that is dismissed without a “legally fair reason”, or without the correct legal process being followed, can seek compensation through an employment tribunal where, if successful, can be rewarded up to £74,000 in compensation, or a year’s pay whichever is lower. Additionally you will be responsible for your employment lawyer’s fees, regardless of whether or not you win, which for a tribunal case can run into the thousands.
- Employees do need to have at least a minimum 2 years service to claim unfair dismissal, however if they can show that they were “discriminated” against unfairly when being dismissed, they can make a tribunal claim based on that, regardless of their length of service which leads to the next point.
- Perhaps the issue that employers think they know most about is discrimination, as it is publicised so often, however you probably don’t know that in certain cases of discrimination, an employment tribunal can award unlimited compensation, and once an employee has shown there is a case for discrimination, it is up to the employer to prove otherwise. A difficult task indeed.
- For clarification, the law protects employees from being discriminated against on the grounds of age, nationality, national origin, race, colour, ethnic origin, disability, religion or belief, gender reassignment, marriage or civil partnership, pregnancy or maternity, sex and sexual orientation.
- You must be aware, there is no length of service requirement for employees to make a claim of discrimination.
Legally required Company Policies
- There are a number written company policies you are legally required to have in place, such as maternity, disciplinary and grievance procedures. It is also strongly recommended that you have various other policies in place such as equality/equal opportunities, holiday entitlement, sickness and sickness absence pay, for your own benefit and those of your employees.
- Failing to have the appropriate employment policies in place leaves you at risk of it counting against you, should an employee bring a claim against you; ultimately resulting in larger compensation rewards.
Does an employee have the “right to work” in the UK
- This is quite a major point. You must check and ensure you have evidence such as a passport or work permit. Failing to carry out these simple checks can end in a fine of up to £20,000 should it be found that your employee does not in have the right to work in the UK and therefore you are ultimately employing illegal workers. Not only is this costly but will be rather damaging to your Company’s reputation.
There are other employee issues that can cost you greatly, not perhaps in court in the form of compensation, but in time dealing with employee issues. There is so much information freely available on the internet that employees who feel they are not being treated fairly will seek to be compensated for the wrong doing. It is true to say that employment tribunal cases have fallen since the introduction of the fees in 2013, but it does happen, and you should not be leaving yourself wide open to costly mistakes that can be easily avoided.
So now you know how much ignoring your HR responsibilities can cost you, are you still prepared to take the risk?
HR Revolution can help you avoid these risks, call us on: +44 (0) 203 538 5311 if you need advice with any of the issues covered above. If you just want to get yourself covered with the right documents visit our online HR document shop for all the legally compliant employment contracts, handbooks, policies, letter and form templates you could ever need.