If you’ve been happily running your small business as a sole trader so far, the whole world of HR has probably passed you by. Until now, managing staff sickness probably looked like taking some painkillers before getting straight back to client work.

And holiday entitlement? Well, you save up throughout the year to make sure you can take a week or so off in the summer.

However, if you’re now at the point where you’re thinking of hiring employees, you’re going to have to start thinking about implementing a few policies and procedures to keep yourself on the right side of the law.

Do you really need to worry about HR?

Are you familiar with the ins-and-outs of the workplace pension? What would you do if your employee levelled a claim of discrimination at you? If business started to slow, would you know how to deal with potential redundancies legally? If an employee behaved inappropriately or even stole from you, would you know what steps you should take without falling foul of employment law?

A lack of solid HR procedures can, at best, contribute to problems of staff retention and, at worst, land you in court. It’s not worth the risk.

Now, before you decide that you’re quite happy to remain a sole trader, and abandon the idea of taking on additional staff altogether, wait. Putting some formal HR procedures in place doesn’t have to be a daunting task. We’ve broken down some of the main areas for you.


Contracts are vital; they protect employer and employee both. They ensure that all parties are clear on the employee’s duties to the company and the company’s responsibilities to the employee in terms of pay and working conditions.

You must provide your employee with a Written Statement of Terms and Conditions of Employment within two months of their start date. This document should be largely based on a worker’s statutory rights, which include things like the right to minimum wage, a minimum of 28 days paid holiday entitlement, workplace pension details, and the right to maternity or emergency leave.

Health and safety.

Everyone deserves a safe and secure work environment, and as an employer, it is your duty to provide this for your staff. You should carry out regular risk assessments and any accidents or incidents in the workplace must be recorded. Health and safety policies should also cover the company’s stance on bullying and discrimination. Producing an employee handbook can be an efficient way of covering your bases on health and safety procedures. Liability insurance is a must!


Gone are the days when it was enough just to slip a few notes into your assistant’s hand at the end of a shift. You must supply all staff members with a formal pay slip which details gross salary, any deductions for tax, pension payments and national insurance, and net pay.

Managing staff sickness.

Do you know what you would do if a staff member was repeatedly calling in sick on a Monday morning? Or how to handle a long-term staff absence?

Staff sickness can have a huge impact on your business productivity and profits, so it’s important that you have procedures in place to deal with all eventualities. You can do your bit by ensuring employees have healthy working conditions and are not subjected to stressful situations such as workplace bullying.

You also need to consider how you will monitor staff absences, how staff should let you know about sickness and how you will handle ‘return to work’ interviews. It’s also vital that you do your research on your employees’ rights to statutory sick pay.

Performance management.

Your staff’s personal development is another area you need to explore as an employer. Of course, this is more than just a ‘should do’ — you want to get the best from your employees. Happy, fulfilled staff members are the backbone of a successful business so, legal requirements aside, you want to take care of your staff.

Be prepared to track staff performance and give employees regular performance management reviews and appraisals. You should keep one copy of the appraisal documentation, giving another to the employee and keeping a third copy for their personnel file.

Handling redundancies.

So far, we’ve focused on hiring new staff and taking care of them once they’re in. Do you know what you would do if you decided to downsize your business or if things became too slow to justify paying additional staff members? This is an area that, if handled incorrectly, could land you in real trouble. The last thing you need is to be hit with an unfair dismissal claim. It’s worth doing your research on this and working out a detailed redundancy procedure before you need to use it.

Admittedly, this does sound like a lot of work, but making an effort to put these policies and procedures in place now, will save you time and untold hassle in the future. Apart from the obvious advantage of not being dragged to court by an angry employee, having solid HR practices will help you retain your staff, ensure that fewer days are wasted by employee absence, and save you money.

So what are you waiting for?

More great advice for SMEs right here.

Posted by Darren Taylor

Darren is a Marketing Manager specialising in Digital Marketing