Top 13 HR Policies for Small Businesses

Why are HR policies important?

What are HR policies?

HR policies are written documents that provide guidance for managers and employees on a variety of topics. They help to provide transparency for all employees to create a positive working environment.

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

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 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 busienss 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.

HR departments are 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.

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.


What are the consequences of not having 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 job 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, system 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 what HR policies are required by law in the UK, there are three main policies that companies are obliged to have, these are:

  1. Disciplinary and Dismissal policy
  2. Grievance Policy
  3. Health and Safety Policy

There are other policies that 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:

  1. Equal Opportunities
  2. Sickness and leave of absence
  3. Flexible Working
  4. Training and Development
  5. Bullying and Harassment
  6. Code of conduct
  7. Internet and email
  8. Drug and Alcohol
  9. Social media
  10. 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.

It is vital that businesses ensure that there is a clear understanding of the risks involved.

Tips on writing an HR policy

No 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 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 at 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 stating that something will happen to an employee if they persistently do something wrong if nothing actually happens. This will just end up with employees thinking that policies are meaningless, which will make them near impossible to enforce.


What is each policy for?

  1. 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.
  2. 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.
  3. Health & 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 are the trained first aiders.
  4. Equal Opportunities – An equal opportunities policy stops employers discriminating against employees or potential employers on the basis of a protected characteristic, such as gender, age, race, religion, sex, marital status, pregnancy, gender reassignment or disability. This policy creates a fair environment for employees. Every employee should have an equal chance to, apply and be selected for jobs, be trained and promoted, reasonable adjustments being made to accommodate a physical disability, have their employment terminated equally and fairly.
  5. Sickness and leave of absence – all employees at times will be absent from work, this 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.
  6. Flexible Working – all employees have the legal right to request flexible working not just parents or carers, 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 within a reasonable manner, by having a policy in place it will outline how each request will be dealt with and how their request should be made, i.e. in writing and who to.
  7. 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 do to support employees and to develop employees with their roles. T&D policies are a key part of a business’s overall strategy.
  8. Bullying and Harassment – 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. By having a policy in place, it lets employees know exactly what is deemed as bullying, harassment and discrimination and also the policy needs to ensure that it outlines how such complaints will be dealt with and the consequences too.
  9. 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, 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.
  10. Internet and email – 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.
  11. Drug & Alcohol – Drug and Alcohol policies promote and maintain a risk-free environment, the use of drug and alcohol during and outside of working hours presents a risk to businesses through injuries, lost productivity and absenteeism.
  12. Social media – these days social media is rapidly increasing and is incorporated into everyday working life. It is essential for all companies to have a social media policy in place to protect the company 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.
  13. Privacy policy – business has 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, address, phone numbers and emails which are all classed as personal information.

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 175 6601 or email us at


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