Common HR challenges for UK small businesses: Six critical mistakes to avoid

At SafeHR, we support thousands of small businesses across the UK, helping them tackle a wide range of HR challenges. Through this extensive experience, we’ve identified six critical HR mistakes that small businesses often make. These errors typically fall into the following categories:

• Performance Management
• Probationary Periods
• Disciplinary Procedures
• Absence Management
• Redundancies
• TUPE Compliance

Before we delve into these common mistakes, it’s important to understand why staying on top of HR processes is essential for small businesses. The right HR support can help small businesses:

1. Boost efficiency: Properly applying HR policies and procedures can save time and ensure effectiveness.
2. Safeguard your reputation: Good HR management protects your reputation as an employer, making it easier to attract and retain top talent.
3. Avoid costly employment tribunals: Poor HR practices can lead to expensive legal disputes, whether you win or lose.

Poor management of employee performance

One of the most common HR mistakes small businesses make is not addressing employee performance issues effectively. Often, by the time small business owners contact us, they’ve reached their limit with an underperforming employee. Unfortunately, informal conversations have often taken place without any formal procedures being followed, which can complicate or delay a necessary termination.

To avoid this, it’s vital to implement and consistently use a Capability Procedure. This will give the employee every opportunity to improve while providing the evidence needed for a fair and risk-free dismissal if performance doesn’t improve.

For more information on managing employee performance, read our helpful blog by clicking here.

Inadequate use of probationary periods

Probationary periods are a crucial tool for confirming that you’ve made the right hiring decision. However, many small businesses fail to take full advantage of this period, either by not conducting regular probation reviews or by providing insufficient feedback to new employees.

Properly managing probation periods can help avoid future performance issues and increase overall employee engagement.

Learn more about effectively managing probationary periods in our comprehensive blog.

Avoiding disciplinary procedures until it’s too late

Another common mistake small businesses make is delaying disciplinary action until minor issues become major problems. In smaller companies, where close relationships can make confrontation uncomfortable, it’s tempting to avoid addressing issues. However, this can lead to bigger problems down the line, including the risk of unfair dismissal claims.

To mitigate this risk, it’s essential to act quickly on any concerns, document every step, and follow a formal disciplinary process when necessary.

For advice on handling disciplinary actions, read our disciplinary procedures blog.

Informal and inconsistent absence management

Small businesses often manage employee absences informally, which can lead to exploitation or unmanageable patterns of absence. Without a formal procedure, it’s challenging to address attendance issues effectively or fairly.

Implementing a formal absence management process, with the help of HR software, can protect your business and help identify and resolve attendance issues early.

Our guide to absence management offers practical tips for improving your approach.

Mishandling redundancy procedures

Redundancies are a difficult but sometimes necessary process for small businesses. However, failing to follow the correct procedures can result in automatically unfair dismissals, leading to costly legal consequences.

Common errors include:

1. Not holding any consultation meetings.
2. Making decisions on who will be made redundant before the process has commenced.
3. Not ‘pooling’ employees with similar roles and using fair ‘selection criteria’.
4. Not following the correct timescales for the consultation process, or notice of meetings.
5. Not allowing representation at meetings.
6. Not documenting the process appropriately in writing (letters, meeting notes, etc.).

To avoid these pitfalls, make sure you’re familiar with the correct redundancy procedures. Read our comprehensive redundancy guide by clicking here.

Misunderstanding TUPE regulations

The Transfer of Undertakings (Protection of Employment) Regulations, commonly known as TUPE, can be challenging for small businesses to navigate. Errors often occur when businesses fail to fully understand the process or don’t seek the necessary advice.

If your business is undergoing a transfer or service contract change, it’s crucial to follow TUPE regulations to avoid complications.

For a clear understanding of TUPE, visit our TUPE basics guide by clicking here.

Conclusion: Avoiding HR mistakes in UK small businesses

HR mistakes can be costly, but they are preventable with the right approach. By acting quickly, conducting thorough research, and obtaining expert HR support, you can effectively manage the most common HR challenges. Remember, the primary goal of HR policies is to enhance employee efficiency and effectiveness—dismissal should always be a last resort.

Investing in expert HR advice is essential for protecting your business and ensuring compliance.