HR compliance guide for small businesses

The vast number of regulations that govern small businesses can be very time-consuming, if not intimidating, for busy business owners to get to grips with. This is now especially true given the rise in remote working and how this affects employment regulations.

This guide provides a starting point for small business owners to seek detailed information from trusted sources like Acas and the UK Government website, which is easier to read than the regulations themselves. This introductory guide will give you an overview of some of the regulations you need to know about and why. So, let’s dig in!

The Employment Rights Act 1996

The scope of employment regulations is vast. Its central body is the Employment Rights Act 1996, which has, through time, been amended and added to by many other acts. There are also lots of other standalone regulations.

As a non-exhaustive overview, the Employment Rights Act 1996 has important provisions, such as:

1. A written statement of employment particulars

This is a document that contains specific information about the employment. It is different to an employment contract. Whilst there is no legal obligation to provide a written contract of employment (it can be verbal instead, though this can leave employers more vulnerable to disputes), employers must give all employees a written statement with some elements covered before the employment starts.

If at any time during employment the particulars change, the employer is required to give a new written statement containing the updates no later than one month after this change.

2. The protection of wages and no unlawful deductions

Employees are guaranteed payment for contracted working days and hours when they are available or in attendance at work, even if no work is available or carried out. There are some limited exclusions, which include during the first month of employment, during a strike or industrial action, where the employer has offered alternative work to the employee’s job description or duties, and when the employee refuses to carry out that work. This does not affect any contractual right to receive payment.

3. Providing an itemised payslip

An employee is also entitled to an itemised payslip that shows all earnings and deductions during the pay period. Some deductions arise in law, for example tax, national insurance, pensions, or participating in industrial action. Other deductions can only be made where a contractual right exists or with the consent of the employee, for example deductions to recover losses through theft or damage (note that no deductions should exceed 10% of the remuneration in any one payment) or recover the cost of training if the employment is terminated within a specific period.

4. A minimum notice period

An employee has the right to a minimum notice period when the employer terminates the contract, that being none during the first month, one week between the end of the first month and two years, plus one additional week for each completed year thereafter.

The notice the employee gives to the employer is at the discretion of the employer and should be based on the expected length of time that the employer would need to recruit a suitable replacement, but remember the employee is still entitled to be paid and receive all other benefits and entitlements throughout the entire notice period. An employee can be summarily dismissed without notice if a contract of employment expressly provides for this, for example for gross misconduct.

5. Dismissal protections

An employee cannot be unfairly dismissed. Where an employee claims to have been unfairly dismissed, the employer needs to prove that it was fair. If a dismissal is found to be unfair, this can cost a business £10,812 on average. Acas provides extensive guidance about when termination may be fair or unfair.

A claim cannot be brought for unfair dismissal if the employment has not exceeded a period of 2 years; however, there are some circumstances where termination is automatically unfair and not subject to the limitation period, for instance dismissal due to whistleblowing, pregnancy/maternity, or making a formal flexible working request.

An employee cannot be wrongfully dismissed either. Wrongful dismissal includes a failure by the employer to follow a correct or standard procedure, including a disciplinary, capability or redundancy procedure. There is no 2-year employment limitation period for wrongful dismissal.

6. Redundancy regulations

Redundancy is a type of dismissal. Where an employee is dismissed for redundancy reasons, they are entitled to redundancy pay if they have been employed for 2 years.

Redundancy pay is calculated depending on the employee’s age and length of employment; an employee over the age of 41 is entitled to an amount of one and a half weeks’ pay for each year of employment; an employee between the ages of 22 and 41 is entitled to one week’s pay for each year; and an employee under the age of 22 is entitled to half of one week’s pay for each year of employment. Redundancy must be fair and follow a correct procedure as established by Acas.

7. Employment tribunal rights

An employee has the right to make a claim in an employment tribunal when they think you’ve done something against the law, for instance causing discrimination or unfairly dismissing someone. There is a separate set of rules under which tribunals work and make decisions, called the Tribunal Procedure Rules.

8. Insolvency protections

If a company is insolvent, the employee may be entitled in some circumstances to claim some payments from the secretary of state, including salary or wage of up to 8 weeks (subject to a maximum weekly amount, including during a notice period), holiday pay, redundancy pay, and a basic award for unfair dismissal.

9. Protection from suffering detriment

There are built in protections from suffering detriment where the employee, for instance:

10. The right to reasonable time off

An employee has a right to take reasonable time off (not always paid and it may be subject to conditions or limitations) for particular circumstances, including:

• The performance of their duties in the capacity of a justice of the peace, prison monitor, prison visiting committee, local authority, statutory tribunal, member of a relevant heath body, member of a Better Outcomes for Children and Youth committee, Scottish environmental protection agency, lay observer, a committee of the Immigration and Asylum Act, or a short-term holding facility for that act
• During a notice period to terminate the employment to attend interviews for new employment or arrange training
• Dealing with a family emergency or to take care of a dependent
• Suspension from work on medical grounds under an enactment or code of practice under the Health and Safety at Work Act 1974 or on maternity grounds where suitable alternative work is not available

The Working Time Regulations 1998

The Working Time Regulations 1998 provides regulations relating to an employee’s working time, rest breaks, and holidays. Some of the provisions do not apply to some types of employment.

Under the Working Time Regulations, employees get:

A maximum working time

• An employer has an obligation to ensure that an employee’s working time does not exceed an average 48 hours during any seven-day period over any period of 17 weeks, or the total period of employment if the employment has been for less than 17 weeks, excluding any leave taken for holiday, sickness, or maternity.
• Working time includes all employment, including any work undertaken for another employer, so it is wise to include in a contract of employment an obligation on the employee to disclose all other work to ensure that the restriction is not inadvertently breached.
• An employee who is over the age of 18 can exclude the restriction by providing the employer with a written declaration. Employers cannot force or coerce an employee into excluding the limitation on working hours. The exclusion can be for a specific period, or the employee can withdraw the exclusion by giving the employer not less than seven days' notice, unless the written declaration provides a different period.
• If an employee’s role includes traveling, the travel time is included in the working hours.

Night worker protections

• An employee who is a night worker (defined as such by having a work period of three hours or more between the hours of 11pm and 6am) cannot work for more than an average of eight hours in any 24-hour period, over any period of 17 weeks, or the total period if the employment has been less than 17 weeks.
• If the night worker is in a role which involves physical or mental strains or special hazards, the restriction is a strict eight hours in a 24-hour period, not an average number of hours.
• A night worker must be given the opportunity to undergo a health assessment before undertaking any night work. Any costs associated with the health assessment are to be met by the employer.
• An employee who is under the age of 18 cannot be assigned any work duties between the hours of 10pm and 6am, unless they have been given an opportunity to undergo a health assessment. Any costs associated with the health assessment are to be met by the employer.
• The employer is required to maintain records to show that any restrictions or recommendations of a medical practitioner following a health assessment are adhered to.

Rest periods

An employee over the age of 18 is entitled to:

• A rest period of 20 minutes in each 6 hours of working time; and
• A minimum rest period of eleven hours in each 24-hour period; and
• An uninterrupted rest period of 24 hours in each week or 48 hours in each two-week period.

An employee under the age of 18 is entitled to:

• A rest period of 20 minutes in each 4-hour work period; and
• A minimum of 12 hours rest in each 24-hour period, but this rest period need not be in one single period if the work is only for short periods of time; and
• An uninterrupted period of 48 hours in each week.

Rest periods can be delayed where the employee is in a role that requires continuity or where a particular task or activity cannot be interrupted, and they do not apply to shift workers when the shift changes and the rest periods cannot be taken during the period of change.

Statutory holiday leave

Although this would fall within the realm of this guide, myhrtoolkit already has a specific guide on holiday entitlement, which provides information on statutory holiday entitlements for employees with a variety of working patterns.

Remote working and compliance

A result of the recent pandemic restrictions is that many employers who had not considered the possibility of remote working discovered that, in fact, the business could continue to operate without the need for employees to be in physical attendance at an office and realised that there were advantages to both the employer and employee. Many businesses have continued allowing employees to work from home, even if not all the time, after restrictions were lifted.

In this light, it will be beneficial to cover some of the more important (and sometimes overlooked) aspects of working remotely when it comes to employment regulations and effective business operations, including:

Things you need to consider as an employer

• Whether the role can be carried out with the same degree of efficiency, productivity, and satisfaction away from the business base
• The employee’s length of service, completion of training, past performance, ability to work and complete work to deadlines without supervision or direct management
• Whether working remotely creates an additional and unacceptable workload, increases the difficulty or complexity of performing duties or carrying out normal business procedures, or causes unnecessary interruption or disruption
• The needs, circumstances, and requirements of the employee
• The cost effectiveness of any arrangement
• Whether the arrangement may result in any detrimental or adverse effects to the quality of service to the customers, or the effectiveness or efficiency of the business
• The views of any team member that may be directly affected by the arrangement
• The availability of resources to allocate and monitor workloads, assess performance, engage in training, conduct reviews, and manage remote working

The health and safety of remote workers

As an employer, you remain responsible for the employee’s health and safety, even when working remotely; therefore, no working from home should be undertaken until the workspace has undergone a health and safety assessment. Office work is generally regarded as minimal risk and it is usually sufficient for the employee to complete a health and safety checklist.

One of the regulations that is often overlooked is the Health and Safety (Display Screen Equipment) Regulations 1992, which deals with workstations and eyesight and applies to all employees, including whilst working from home.

Workstations must:

• Be large enough to hold all equipment and allow the employee to change positions and vary movements
• Have a chair that can adjust to ensure correct seating position with sufficient back support
• Have a display screen, which allows:
  • The characters on the screen to be well-defined and clearly formed, of adequate size and with adequate spacing between the characters and lines
  • The image on the screen should be stable, with no flickering or other forms of instability
  • The brightness and the contrast between the characters and the background shall be easily adjustable by the user and to ambient conditions
  • The screen must swivel and tilt easily and freely to suit the needs of the user
  • It shall be possible to use a separate base for the screen or an adjustable table
  • The screen shall be free of reflective glare or reflections liable to cause discomfort to the user
• The employer should request, and where necessary pay for, regular eye and eyesight tests by a qualified practitioner. If any employee reports vision problems or discomfort whilst working with a display screen, they should be required to undergo an eyesight test as soon as possible.
• The employer is also required to pay for (or in some circumstances contribute to) any appliances (including glasses or contact lenses) that a qualified practitioner considers necessary or appropriate when using display screens

This compliance guide can be used as a starting point for business owners but for more in-depth guidance, always refer to Acas guidance to ensure you are complying with the law.

Ensure well written policies

Having compliant, well written policies can also contribute to compliance from both the employer and employee; policies can drastically remove the risk of doubt, misunderstanding or omissions, and reduce the amount of time or involvement of another person explaining the businesses practices and procedures.

The consequences of not complying with regulations can be significant and prevention is always better than cure, so employers should seek professional assistance and consider this to be an investment or insurance, rather than an expense.

HR software to help your SME with compliance

Myhrtoolkit is here to support you through every aspect of HR management for your small business. To find out more about how myhrtoolkit can help you achieve your business compliance goals, book a demo with one of our advisers today.