Time and again I work with small business owners who are surprised when a people-related disaster happens. They are shocked at how quickly an employee can ‘turn’ on them when things go wrong. And I’ve even seen cases where claims have been made against businesses by people who aren’t even employees (yes really, read on!)

Resignation or redundancy?

I recently supported a client through early conciliation with ACAS because of a miscommunication that very quickly ended up in a ‘he said, she said’ situation. Essentially, the employee resigned via text message and was then verbally told by my client that he was ‘being let go’. So, was this a resignation or a redundancy?

Well, the resignation is in writing, albeit by text message. There was no redundancy consultation process and indeed, the role is not redundant. However, the client had a weak employment contract and nothing in the way of policies or procedures for dealing with these types of situations.

Add in a disgruntled ex-employee and my client was very quickly up the creek without a paddle. Without any evidence to disprove the employee’s claim to redundancy, and to avoid a time-consuming and lengthy battle, possibly ending up in tribunal, we agreed to settle the case so that both parties could move forward amicably.

Disaster avoidance is better than disaster recovery

This is just a recent example of where I’ve supported a client after the disaster has happened, by which point it’s too late in the day and it can end up costing thousands to resolve. Whereas if I had been involved at an earlier point, we would have worked together to take steps to make sure correct processes are in place. In this case, I would have recommended my client invite the employee to a meeting to discuss their resignation, and I would have guided the client through that meeting, ensuring that notes were taken so it was clear that the resignation was being accepted and the employee was not ‘being let go’.

As a small business owner, it is important you take steps to protect your business from more than just a disgruntled employee. Yes, they can cause disruption and it can often cost more than you’d expect to resolve, but also costs you in time, energy, and reputation. Mishandling employee terminations, such as failing to follow proper procedures as in this case, mishandling sensitive information, or not providing necessary support during the transition, can result in legal consequences and damaged employee relations.

Common HR disasters

Here are some of the most common HR disasters that you need to look out for as a small business.

Getting payroll wrong

As an employer, you could be in breach of contract if you don’t pay people when you say you are going to. And you also have a legal obligation to provide a payslip too, so don’t forget to do this.

And whether it’s due to a miscommunication, a system malfunction, or just human error, getting someone’s pay wrong can have massive consequences, including financial hardship. Most employees will be fairly understanding of the odd mistake. But their forgiveness will lie in how you deal with and most importantly, rectify, any issues with their pay.

Unfair or biased recruitment processes

An ex-colleague of mine got in touch a couple of years back to share a story about how their company had fallen foul of an accidentally discriminatory recruitment process. The job advert stated that the company was looking to hire a ‘native English speaker’ when it intended to say ‘fluent English speaker’, and consequently a discrimination claim was brought against them by a job applicant (not even an employee!). It cost them a cool £10k to settle and is a perfect example of where a simple mistake can lead to legal action being taken against you and your business. And not even by an employee!

HR is a minefield!

Employment legislation really is a minefield, and it’s all too easy for you, as an unassuming, well-intentioned small business owner, to fall foul. Here are some other key areas to watch out for:

1. Discrimination and harassment: Failing to address complaints of discrimination or harassment in the workplace can result in a hostile work environment and potential legal action against you.
2. Unfair hiring practices: As the above example shows, if you are found guilty of biased hiring practices, such as discriminating against candidates based on their race, gender, or other protected characteristics, this can lead to public backlash, damaged reputation, and possible lawsuits.
3. Inadequate training and development: Insufficient training and development opportunities can result in a lack of employee skill development, decreased motivation, and high turnover rates.
4. Misclassification of employees: Allowing employees to operate as independent contractors to avoid providing benefits, overtime pay, or other legal entitlements can lead to legal consequences, penalties, and negative publicity.
5. Toxic leadership: The presence of toxic leaders who engage in bullying, harassment, or micromanagement creates a toxic work environment, resulting in high turnover, low morale, and decreased productivity.
6. Ineffective performance management: Poorly executed performance management processes, such as inconsistent feedback, unfair evaluations, or lack of clear performance expectations, lead to dissatisfaction, demotivation, and decreased performance across the organisation.
7. Inadequate diversity and inclusion efforts: Failure to promote diversity and inclusion initiatives within the company, resulting in a homogeneous workforce and exclusion of underrepresented groups, can lead to reputational damage and hinder innovation.

Is a disaster heading your way?

As a business owner, you’re juggling countless tasks, and although you want the best for your employees, HR isn’t always front of mind. But HR is tricky, and employment law can catch you off guard… and that is a disaster waiting to happen!

However, taking the right steps to protect your business and your team is crucial. Here are two things you can do right now to get ahead of the game:

1. Take our free HR MOT. You’ll get a report highlighting your greatest risk areas so you can take action before disaster strikes!
2. Sign up to the Fox HR quarterly newsletter (at the top of this page!), for top tips on HR best practice.

Don’t wait for costly HR disasters. Take control and don’t let HR outfox you – get in touch with Laura at Fox HR today!