Preparing for and facing HR challenges as a small business
No business owner should expect a completely smooth path to success – especially not when it comes to handling people on a daily basis.
Accepting that challenges will arise (and being prepared to face them when they do) will help you build a business that can withstand even the most complex elements of human nature and employment law.
Equal pay and discrimination
Updated rules on equality came into force in 2010 including adjustments to laws on equal pay and discrimination in the workplace.
Rules on equal pay
The Equality Act 2010 requires that employers treat people of all genders equally, this includes financial aspects like basic pay, overtime rates, annual leave and pension. If comparable employees are performing comparable work, they must be paid the same. Employers should be aware that compensation for any pay discrepancy can go back six years.
Employers cannot stop staff discussing their terms and conditions if the purpose is to ascertain whether they are receiving ‘equal pay’. It is unlawful to subject any employee who has had such discussions to any form of detriment.
Companies in Great Britain with more than 250 employees must publish their gender pay gap information. This can highlight inequality to the company’s workforce, creating a reputational risk and a barrier to progression.
How to avoid falling foul of equal pay legislation
A clear equal pay policy can assist a business in maintaining equal pay. However, the first step is to assess whether your business has existing pay inequality. Gender pay reporting can highlight problem areas, as can a job evaluation. These can be time consuming but save you in the long run.
Other types of discrimination
The Equality Act covers discrimination in the workplace on protected characteristics, including race, gender, sex, disability, pregnancy, age or ethnic origin. Discrimination can take the following forms:
- Direct discrimination – based on a characteristic, for example if an employer rejects a candidate because of a protected characteristic
- Indirect discrimination – an employer has a rule or policy which disadvantages employees possessing a protected characteristic
- Harassment – unwanted conduct which violates an employee’s dignity or creates a hostile, degrading or offensive environment.
- Victimisation – subjecting an employee to a detriment because they have carried out a protected act – this can include ostracising an employee because they have complained of discrimination.
Unlike claims for unfair dismissal, where an employee must have been employed by a business for two years, individuals have the right not to be discriminated against even prior to interview. Protection is not limited to your workforce, those who are buying your services are also entitled not to be discriminated against.
Liability for discrimination is uncapped, it can cause disharmony in the workplace and a risk to your reputation.
Discipline issues in the workplace
Sometimes employee behaviour may require a disciplinary response. In these situations, it is vital that employers recognise what process is expected of them.
Determining the seriousness of conduct issues
When looking at conduct outside of output, performance or absence-based issues, there are several factors to consider. Some conduct issues can be handled on an informal, verbal basis, others could constitute gross misconduct. A carefully considered and well drafted policy should give guidance to the standards of conduct employees are expected to abide by and to set out the consequences if they don’t. An off-the-shelf disciplinary policy may not align with what you expect in your business.
Taking disciplinary action
Getting a disciplinary investigation right is the foundation for carrying out a fair disciplinary procedure. A mistake at the outset can be difficult to rectify later. Disciplinary investigations should be:
- Carefully considered
- Set out as an investigation and not a disciplinary hearing
The subsequent disciplinary procedure should follow the ACAS Code of practice on Disciplinary and Grievance Procedures (ACAS Code). This means you must:
- Establish the facts, carrying out necessary investigations without unreasonable delay
- Inform the employee, notifying them in writing about the alleged misconduct and the possible consequences
- Allow the employee to be accompanied at the disciplinary meeting, either a fellow worker or a trade union representative
- Decide on appropriate action after the meeting and inform the employee in writing, ensuring that whatever outcome is fair
Depending on the nature of the conduct being discussed, outcomes could include demotion, performance improvement plans, fining or suspension without pay or training.
If disciplinary action is taken, the employee should be offered the right of appeal. The ACAS Code states that five days from the communication of the decision is a reasonable length of time for making that appeal.
Dealing with harassment and bullying
Employers should have a bullying and harassment policy so that these sensitive issues can be dealt with in a fair, prompt and consistent manner.
Harassment in the workplace is defined as ‘unwanted conduct related to a relevant protected characteristic, which has the purpose or effect of violating an individual’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for that individual’.
Bullying is defined as ‘repeated, unreasonable and unwelcome behaviour directed towards an employee or group of employees that creates a risk to health and safety’.
Bullying and harassment can be verbal or written, visual images or related supervision methods, for example recording telephone conversations if not all employees are treated the same way.
Aside from the risk of legal claims, a culture of bullying can badly effect morale, productivity and absence levels.
Handling employee grievances
A carefully considered grievance procedure can reduce the risk of claims by enabling employers to rectify matters at the outset before they develop.
What constitutes a grievance?
A grievance is a problem, concern or complaint made by an employee to their employer, relating to their employment. Grievances can be raised in a variety of ways – in a letter entitled ‘grievance’, a performance review or verbally in conversation with a manager – and will usually be raised when an employee feels they are being treated unfairly, or something is not to their satisfaction.
Common grievances are:
- The job role and what the employee is expected to do
- The terms and conditions of employment
- The way an employee feels they are being treated
Whenever a grievance is raised, managers should offer prompt acknowledgement and ascertain what it is the employee is grieving about. Failure to properly understand a grievance will lead to issues later in the process, resulting in wasted effort or duplication. Also start with the end in mind. Consider who is appropriate to investigate the grievance, who will hear the grievance and who will determine any appeal against that decision.
How to avoid and prevent employee grievances
There are steps employers can take to reduce instances of grievances in the business:
- Encourage informal conversations between employees and line managers. An open line of conversation means employees feel safe to voice concerns as they arise, not when they are worse
- Communicate clearly with employees – openness and transparency will help prevent an environment of rumours and misinformation
- Clear policies, procedures and documentation such as employment contracts, salary and benefits, anti-bullying and harassment and health and safety will establish expectations and give your employees information to refer to
- Ensure employees know where to find your written disciplinary and grievance procedure
Actions upon hearing a grievance
The first step is to respond. According to the ACAS Code, you should respond ‘without unreasonable delay’, which should be five days. However, if the circumstances of the grievance require thorough investigation, it may not be practical to hold a meeting after just five days. In that case, the manager should hold a meeting with the employee to explain the situation, and then adjourn to complete the investigation.
At the post-investigation meeting, as with disciplinary hearings, employees should be offered the opportunity to attend with either a colleague or trade union representative. In certain circumstances it may be appropriate to allow a friend or family member to accompany an employee or for the investigation to take a different form. This could include, for example, where an individual’s disability inhibits effective participation in the process.
You should consider whether to allow an individual to call witnesses, or whether written statements are more appropriate. There is no one size fits all approach so you must remain adaptable to the situation. Whatever the subsequent actions entail, you should keep a clear written record of everything from notes of interviews with witnesses, minutes of meeting notes and notes from discussions to help you review and evidence your decision. An employee should also be given the opportunity to appeal any decision, which should be to a more senior individual, within the organisation. For small organisations this can present a problem, and advice may need to be sought at an early stage, particularly in sensitive situations, which could lead to claims.