Speak to an Adviser 0330 175 6601

Top 13 HR Policies for Small Businesses

With so many HR and employment policies recommended to businesses, it can be difficult to know which are the most essential. Keep reading to learn the top 13 HR policies a company should have to stay compliant with employment contracts and UK employment law.

What are Company Policies?

Company policies are formal guidelines, rules, and regulations established by an organisation to govern the behaviour, actions, and decisions of its employees and stakeholders within the workplace. These policies are designed to set expectations, ensure consistency, maintain compliance with legal and ethical standards, and promote a productive and harmonious work environment. They are also referred to as a company’s HR policies.

These policies are typically communicated to employees through employee handbooks, orientation programs, training sessions, and accessible company intranet or communication platforms. Adherence to these policies is vital for maintaining a productive, ethical, and compliant workplace.

HR Policies and Procedures in the UK

A company’s HR department is required to create policies that enable businesses to run smoothly. Policies contain high-level requirements and principles that functional areas or departments of the business must follow.

These HR policies are written documents that guide managers and employees on a variety of topics. They help to provide transparency for all employees to create a positive working environment. In addition, these policies help to address how a company’s procedures will further support managers in how they meet the business objectives.

HR procedures are linked with policies and define lower-level processes, such as daily, weekly, or quarterly functions and job activities. Procedures bring a set of functions and processes together which are then consolidated in a defined category such as hiring and termination or absence reporting.

Why are Company Policies Important?

A company’s HR policies and procedures are important to businesses as they provide structure, control, consistency, reasonableness, and fairness to all employees. Some HR policies are required by law in the UK (see details below), so they are necessary to ensure compliance with employment legislation and let employees know what the company’s responsibilities are and what their individual responsibilities are.

Businesses that have set policies in place are better prepared to deal with any workplace issues that may arise, policies provide structure and help organisations to run more efficiently. HR policies and procedures for a small business play a vital role in its future success. The HR function in companies oversees a wide range of administrative functions including:

  • Salaries
  • Hiring of employees
  • Benefits

Who Develops HR Policies and Employment Policies? 

It will generally depend on the size of the company as to who is responsible for creating and implementing policies. For example, small and medium-sized companies may outsource this to professional HR Consultants to design, create and assist with the implementation of policies. Larger companies usually have HR professionals to do this for them; however, they still do sometimes seek help and guidance from HR consultants.

The Consequences of Not Having HR Policies

Failure to have HR policies can prove critical for any business. Some businesses think that if things are running smoothly there is no need to worry about documenting policies, procedures, and processes. This can be a serious mistake as it overlooks the importance of risk management practices.

Not having the correct HR policies and correct HR planning can have a dangerous and negative effect on the productivity of a business.

Poor HR or no HR policies can affect businesses by having:

  • Unhappy Employees – will not be engaged in their specific job responsibilities or duties, which can lead to an unproductive workforce.
  • Dissatisfied Customers – unhappy employees do not make customers happy as employees will treat customers the way the business treats them. Customers who have bad experiences can also spread negative comments that can damage the reputation of a business.
  • High Employee Turnover – this can be a result of bad HR planning by not understanding why employees leave their jobs to ensure this doesn’t happen next time.
  • Loss of Business – if experienced employees leave a business then the business could also lose clients that they built a good relationship with. Experienced employees have extensive knowledge of products, services, systems and processes which makes them valuable.
  • Increased Costs – high employee turnover increases business costs. The recruiting costs to replace employees on average cost businesses approximately one-fifth of an employee’s salary.

13 Essential HR Policies for Small Businesses

Starting with which HR policies are required by law in the UK, there are three main policies that companies are obliged to have, these are:

  • Disciplinary and Dismissal Policy
  • Grievance Policy
  • Health and Safety Policy

Other policies are not legally required, however, it is considered best practice to have these in place. The next top ten HR policies and procedures for small businesses are:

  • Equal Opportunities
  • Sickness and Leave of Absence
  • Flexible Working
  • Training and Development
  • Bullying and Harassment
  • Code of Conduct
  • Internet and Email
  • Drug and Alcohol
  • Social Media
  • Privacy Policy

When creating policies, HR should look to ensure that all policies and procedures are clear and specific and that they provide flexibility to meet changing conditions in a business. Businesses must ensure that there is a clear understanding of the risks involved.

What Policies are Required by UK Law?

In the UK, companies are mandated by law to have several HR policies in place to ensure fair treatment, compliance with regulations, and a conducive work environment. These policies are critical for maintaining employee rights and fostering a healthy organisational culture. Here are the key HR policies required legally:

  • Equal Opportunities Policy
  • Fair Disciplinary Hearings Policy
  • Personal Data Protection and Privacy Policy
  • Lateness and Time Off Policy
  • Company Ethics Policy
  • Environmental Policies
  • Equal Pay Policy

Compliance with these HR policies is essential for organisations to operate legally and ethically whilst nurturing a fair work environment. It also contributes to employee satisfaction, engagement, and the overall success of the organisation. It’s important to regularly review and update these policies to reflect changes in legislation and evolving organisational needs.

What Policies Should a Company Have in the UK? 

All companies in the UK should have the following policies to stay legally compliant and to offer their employees protection. 

Disciplinary and Dismissal Policy

With a clear disciplinary policy in place, it is easier to deal with problems that arise in the workplace. Employees must know how and for what issues they can be disciplined for. A discipline policy should be a step-by-step process that ensures fair and appropriate treatment happens. Discipline policies are required by law and must comply with the ACAS code of practice.

Grievance Policy

If employees have an issue in the workplace, they need to know who they are meant to discuss this issue with. A grievance policy acts as an important tool for employees to understand what steps they should follow when making a complaint and it clearly outlines the steps that the company should take when dealing with the complaint.

Health and Safety Policy

Health and Safety policies highlight the safety procedures of the workplace and the responsibilities of all employees to keep the workplace safe. A Health and Safety policy should outline exactly what employees are expected to do in case of an emergency if someone is injured if there is a fire, where the nearest first aid kits are held and who the trained first aiders are.

Equal Opportunities Policy

An equal opportunities policy stops employers from discriminating against employees or potential employers based on protected characteristics, such as gender, age, race, religion, sex, marital status, pregnancy, gender reassignment or disability. This policy creates a fair environment for employees and shows the company’s compliance with the Equality Act 2010. Every employee should have an equal chance to apply and be selected for jobs, be trained and promoted, have reasonable adjustments made to accommodate a physical disability, and have their employment terminated equally and fairly.

Sickness and Leave of Absence

All employees at times will be absent from work which will be for a variety of reasons including, sickness, holidays, maternity/paternity, parental leave, unpaid leave, jury service, bereavement etc. It is best practice to have a leave of absence policy in place which lets employees know what benefits are on offer for different types of leave and, more importantly, the process an employee should follow to request such leave.

Flexible Working Policy

All employees have the legal right to request flexible working, not just parents or carers, but they must have been employed with the same company for at least 26 weeks. Flexible working can be changing work patterns, start and finish times or working from home. It is important to have a flexible working policy in place as employers must ensure that any flexible working request is dealt with within a reasonable manner. Having a policy in place will outline how each request will be dealt with and how their request should be made, i.e. in writing and who to.

Training and Development

Employers should be committed to providing employees with the skills, knowledge and understanding to be able to perform their jobs. A training and development policy will outline the steps and processes that employers will take to support employees and to develop employees with their roles. T&D policies are a key part of a business’s overall strategy.

Bullying and Harassment Policy

Employers can be held legally responsible for any acts of harassment or discrimination in the workplace. To minimise the risk, companies should have a bullying and harassment policy in place to take steps to prevent any bullying or harassment from occurring. Having a policy in place lets employees know exactly what is deemed as bullying, harassment and discrimination, also the policy needs to ensure that it outlines how such complaints will be dealt with and the consequences.

Code of Conduct

A code of conduct policy sets the standards of behaviour that employers expect from their employees. These standards include things such as dress code, mobile phone use, use of company property, and punctuality. A code of conduct policy outlines behaviours that are not acceptable to the company and how these behaviours will be dealt with if they arise. The rules in a code of conduct policy must be clear and accessible to employees and must be communicated to all employees when they join the company.

Internet and Email Policy

Internet and email policies define what is constituted as inappropriate use of company property including computers, laptops, work mobile phones etc. The policy must outline the consequences that an employee may face for breaching the policy.

Drugs and Alcohol Policy

Drugs and Alcohol policies promote and maintain a risk-free environment as the use of drugs and alcohol during and outside of working hours presents a risk to businesses through injuries, lost productivity and absenteeism.

Social Media Policy

These days social media is rapidly increasing and is incorporated into everyday working life. All companies need to have a social media policy in place to protect the company’s reputation. Employees have a habit of listing where they work on their social media profiles, therefore lines between personal and professional networks can become blurred. It is good practice to let employees know that how they behave on social media reflects on the company, especially if they ‘advertise’ on social media where they are employed.

Privacy Policy

Businesses have a legal responsibility to safeguard the personal information of their employees, customers and visitors. Businesses must have a privacy policy in place that states how private information is used and managed. Privacy policies make it clear what information can be made public and what must stay private. These policies should include employee health records, addresses, phone numbers and emails, which are all classed as personal information.

How to Develop Company Policies as an Employer 

To develop effective company policies as an employer, it’s crucial to address significant workplace concerns systematically. Follow these six steps to create well-structured policies that adhere to UK legal requirements and promote a positive work environment. Alternatively, you can outsource your HR needs to trained and experienced experts, taking this responsibility off your shoulders.

 1. Identify the Policy Need

Begin by observing how management and employees handle workplace issues. Identify areas requiring improvement, such as consistent violation of unwritten rules. Recognise the necessity for new policies to address these issues effectively.

2. Define Policy Content

Outline essential areas that the policy should cover, including clauses that prevent potential loopholes. Ensure compliance with UK law, encompassing equality and diversity, health and safety, discipline/dismissal, and grievance matters. Seek legal review from a UK law firm to ensure alignment with legal requirements.

3. Enforce Clear Guidelines

Clearly articulate the desired actions and behaviours employees should adopt, as well as actions to avoid. Include provisions for disciplinary actions in case of policy violation, ensuring clarity and transparency.

4. Communicate Policies to Employees

Notify existing employees of the new policies upon release or addition to the employee handbook. Consider adding a signature line to ensure employees acknowledge and agree to adhere to the policies. This proactive step helps prevent disputes regarding awareness of policies during disciplinary actions.

5. Educate New Employees

During the onboarding process, thoroughly review and discuss company policies with new hires. Have them acknowledge receipt by signing a form, confirming their understanding and commitment to adhere to the policies outlined in the employee handbook or policy list.

6. Regularly Review and Update Policies

Continuously assess the effectiveness of policies and revise them as needed to align with evolving laws, regulations, company objectives, and employee feedback. Ensure your policies remain clear, effective, and compliant with UK laws to maintain a productive and legally sound work environment.

By following these steps, you’ll create well-structured policies that serve the best interests of both your company and your employees while staying in line with UK legal standards.

How to Introduce and Review Policies

When it comes to introducing and reviewing HR policies, consider these important steps for effective implementation and evaluation. Begin by evaluating existing formal or informal practices through a thorough assessment. Research and compare these practices with those of other organisations, particularly within your sector or region. Engage with staff representatives or unions to gather insights and input. Form steering groups or working parties to collaboratively develop policies and establish realistic timelines for their implementation. Conduct pilot runs of draft policies to test their viability and impact. Provide clear guidance to managers regarding policy adherence. Incorporate policies into the induction process for new employees. Maintain an ongoing review process to ensure policies remain relevant and effective. Aim for complementary, adaptable, practical, and enforceable policies in the workplace.

Tips on Writing an HR Policy

Now that you know what policies a UK company should have, here are our top handy tips on how to write your HR policies and procedures right:

  • Identify the need for the policy
  • Identify who will take responsibility for the policy
  • Gather information and use clear language
  • Keep it as brief as possible
  • Avoid information that can become outdated quickly
  • Clarify credibility

Communication and Effectiveness of Policies

All small business policies and procedures must be clear and communicated to all employees, this is usually done during the induction process when an employee first joins a company. Unless employees understand a policy, it will not work. Policies can be part of a company employee handbook or they can be separate documents.

Disciplinary and grievance policies must be set out in a written statement of main terms and conditions of employment or referred to in a written statement where an employee can read them, like a company intranet page or handed out as individual copies.

Policies and procedures must be realistic, meaningful and something that employers are prepared to stand by. There is not any point in stating that something will happen to an employee if they persistently do something wrong if nothing happens. This will just end up with employees thinking that policies are meaningless, which will make them nearly impossible to enforce.

Other HR Policies and Procedures to Consider Implementing Include:

  • Attendance
  • Working from Home / Remote Working
  • Redundancy
  • Conduct
  • Whistleblowing
  • Family Policies, Parental Leave including Maternity, Paternity and Adoption
  • Bring your own device to work
  • Holiday Booking
  • Clocking/Signing in Policy
  • Compassionate and Bereavement Leave

If you would like further guidance on HR policies, assistance writing policies or a review of any existing policies, please contact Clover HR on 0330 173 5491 or email us at info@cloverhr.co.uk.


What types of policies should a company implement?

A company should implement a comprehensive set of policies covering areas such as anti-discrimination, health and safety, data protection, grievance handling, disciplinary procedures, and employee conduct.

Which HR policies are mandated by legal regulations?

HR policies mandated by legal regulations in the UK often include those related to anti-discrimination, equal opportunity, health and safety, data protection, and statutory leave entitlements.

Do company policies hold legal enforceability in the UK?

Yes, company policies can hold legal enforceability in the UK, particularly when they comply with relevant employment laws, are clearly communicated to employees, and form part of the employment contract.

Can you define policies and procedures in the context of the UK?

In the UK, policies and procedures refer to documented guidelines outlining the organisation’s rules, regulations, and protocols that employees must follow. These documents ensure compliance with legal requirements and establish consistent processes for various aspects of employment, including conduct, grievances, discipline, and more.

Mastering Work-Life Balance: A Strategic Guide for SMEs in the UK

Mastering Work-Life Balance: A Strategic Guide for SMEs in the UK

Achieving Harmony: The Art of Work-Life Balance in Modern SMEs In an era where the line between professional commitments and personal life is increasingly blurred, mastering the art of work-life balance has never been more vital. For SMEs across the UK, understanding...

Navigating HR Compliance: Essential Guide for UK SMEs in 2024

Navigating HR Compliance: Essential Guide for UK SMEs in 2024

How An HR Consultancy Keeps You Compliant In the UK, modern laws, regulations and standards are designed to protect employees from unfair treatment by ensuring balanced and equitable workplace practices. For SMEs, understanding these laws and implementing policies and...