HR Policies for Startups – What you should have in place and why

Essential HR Policies for Startups

Providing clarity of expectations for employees as you build your team is key for any successful start-up or small business. Outlining these in clear and concise HR policies and sharing/communicating these with your employees at as early a stage as possible is essential to avoid confusion and to head off any potential issues.

Working with a wide variety of clients, both with businesses who are in the exciting phase of hiring their first member of staff and companies who are already more established and scaling up, we frequently identify lack of clear HR policies as a source of concern or insecurity. Information and online resources can be confusing and overwhelming and there is no need to slow your business down with unnecessary bureaucracy or lengthy legalistic paperwork that no one will read or understand. However, you do want to ensure your business is protected; that employees understand what is expected of them and their rights and obligations from the outset.

Which HR policies does my business need – and why? I have this template – does it really cover me? GDPR is a consideration in HR policies, right? If there are a lot of ‘what-ifs’ and general confusion when you think about HR policies and contractual employment documentation, we can assure you – you’re not alone!

There is certainly no ‘one size fits all’ approach, and tailoring to individual business needs is essential, but we believe that the below guidelines should be a helpful starting point.

The essentials

If you are planning to make your first hire soon, you should have the following documents ready:

  • Offer Letter – Making your first offer is exciting and you will want to make sure your tone of voice gets that excitement across. You will also want to let the candidate know some key information around their employment, such as start date, salary, probation period, who they will be reporting to, their holiday allowance, hours of work and notice period. For clarity, it can also be useful to share the employment contract along with the offer letter. From 6 April 2020, as part of the government’s Good Work Plan, the right to a statement of written particulars will become a right from day one of employment so it is recommended to share this in advance and answer any questions.
  • Contract of Employment – This is the key document setting out the relationship with your employees, setting out their rights and entitlements whilst protecting your business from risk. Particularly if you are just starting to scale your business, it is important to find the right balance in your contracts. It can be daunting letting someone else in to your business and making your contacts and ideas available. Hence you should include robust clauses protecting your intellectual property and clearly defining post-employment restrictive covenants (such as non-competing, non-soliciting, non-poaching).
  • Employee Privacy Notice & Data Protection – Inform your new employees of their rights in relation to their data and what information about them you process and for what reason (e.g. for paying their salary, pension or national insurance contributions) and timescales for holding data.

As an employer, you have a duty to assess whether your candidate has the right to work in the UK. This is increasingly important in light of Brexit. This should be brought up and checked at the offer stage, and it is advisable to include a corresponding clause in your employment contract.

The next level

It will be beneficial to connect the above hiring documents to employee management policies and documentation. Putting such policies in place early will enhance clarity and set the ground rules for collaboration. To do that, as a minimum you should consider putting in place the following policies:

  • Grievance Policy – Misunderstandings and disputes can come up and in most cases these can be discussed and resolved informally. Formal grievances, however, can very quickly become emotionally draining and the last thing you want is to have to come up with a process when you need to manage an actual grievance. It is crucial for a business to not only comply with legislation, but also with its own policies. When you set up a grievance policy, think about whom a grievance can be raised with, including informal and formal steps and define an appeals procedure.
  • Disciplinary Policy – This policy will give you a tool to address employee performance or behaviour that is not living up to the agreed standards. Often these can be dealt with informally. It is highly recommended that you define a formal process around potential disciplinary issues. Think about the steps that you might want to take if disciplinary action is required. These would usually include different levels of warnings, suspension, demotion and dismissal. Remember to inform your employees that they have the right to be accompanied to disciplinary hearings. As part of your disciplinary policy, you should also think about creating a non-exhaustive list of behaviour that will be regarded as gross misconduct.
  • Sickness Absence Policy – Your employee is 2 hours late and has still not shown up for work. That can be cause for worry – or just miscommunication, as they might be sitting at home with a bad cold. Maybe you had never defined the timescales for letting you know that they will not be able to come in, or maybe there is no predefined process as to how they should give notice. Setting up a Sickness Absence Policy and clearly writing down the things that might seem like common sense to you will be really helpful. In this policy you should include periods and way of notice in case of a sickness absence, define what type of certification you want for which period of time (usually self-certification for the first 7 calendar days and a doctor’s note after that) and provide information around sick pay (normally statutory sick pay, but you can enhance it too!).

It is advisable to interconnect these policies. For example, while you should protect your employees from victimization, maliciously raising grievances against colleagues might trigger a disciplinary procedure.

As your business grows, a more detailed Employee Handbook will be needed and should include additional policies such as around different forms of absence, flexible working, internet and social media use, and Health & Safety.

A Handbook sits alongside and complements the Contract of Employment and can be amended at employer discretion, unlike a contract where a contractual amendment will require consultation and written signed amendment. Where there is any conflict, the contract will take precedence.

Your Handbook is often one of the first documents your employees read as part of their onboarding and welcome. It is important to consider the tone it is written in and ensure it reflects your organisational culture. It shouldn’t be filled with legalese and lists of ‘Don’ts’!

If you intend to scale your team rapidly, we would recommend investing in a full Handbook early on rather than an Essential Startup Policy Pack.

Need more support?

To support early stage businesses in implementing the right HR policies from the outset, we offer fixed price HR Startup Packs – tailored to your business needs and aligned to your culture. These will ensure your organisation is fully compliant and the necessary framework is in place to support fast growth.

Contact us to find out more about our flexible HR solutions and discuss how we can support you in setting up effective and practical people and management tools to enable successful growth.