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The Essential Guide to HR Compliance in the UK

Like most small and medium-sized business operators, you wear several hats when it comes to your business. At any one time you’re probably trying to be a visionary entrepreneur, tenacious salesperson, creative thinker and great team manager; all while trying to keep a close eye on compliance, of course.

As hard as business owners work, high-paced multitasking can often leave you open to human error. HR and employment compliance are a vital part of business success, yet can often be neglected, with disastrous consequences.

Learning about HR, and the complex nature of employment compliance, is absolutely crucial. We know it can be complicated, so that’s why we’ve put together this essential guide of UK HR compliance tasks to help.

This guide covers:

  • A general overview of employment law
  • Minimum rights of employees
  • Employment agreements
  • Workplace policies
  • Independent contractors
  • Performance management

What does HR compliance mean?

HR compliance is essentially a commitment by a business to follow the working standards set out by employment laws in a respective city, state or country. Whilst businesses must follow these laws to maintain HR compliance, managing multitudes of employees in accordance with these laws can be challenging.

Creating contracts in line with legal and regulatory requirements, wage and hour laws, and all other applicable laws are an essential part of HR compliance. They ensure employees understand, acknowledge, and comply with laws throughout their employment period.

HR compliance also entails staying updated on any employment law changes. HR professionals must stay abreast on all laws applicable to their organisation, as well as best practices to ensure statutory compliance.

Is the HR department responsible for compliance with local laws?

A HR department has many responsibilities — from recruiting to onboarding, employee training and development, but perhaps most importantly their role is to help the company maintain legal compliance.

HR departments are responsible for making sure that the organisation has fair practices in the hiring process and treatment of employees, setting necessary workplace rules, making sure employees receive their contractual and statutory workplace entitlements, and all other aspects comply with local employment laws.

HR departments are also responsible for creating and maintaining employee handbooks or policies, for full transparency on employer and employee roles and responsibilities. They should also be kept under review and updated to reflect any changes in the regulatory landscape or business needs.

But the onus isn’t entirely on the HR department per se. Business owners play a critical role in HR compliance too. Ultimately, they are responsible for implementing compliance practices and steering the direction of HR teams. If business owners aren’t aware of their responsibilities, HR leaders will struggle in their roles to maintain compliance.

As an employer, it’s crucial to ensure that your employees are up-to-date with the latest statutory changes. Send them for regular HR compliance training if needed, so they can get a thorough understanding of relevant legislation, stay abreast of any legal developments, and avoid non compliance.

What are the important employment laws in the United Kingdom?

a casual interview chat in the office

UK’s labour law is based on (1) case law and (2) employment legislation. The two sources of law enshrine a myriad of rights and obligations that govern the relationships of employees, employers, and trade unions in the UK.

The key legislation which makes up the UK employment legal framework includes:

  • Employment Act 2002
  • Employment Relations Act 2004
  • Employment Rights Act 1996
  • National Minimum Wage Act 1996
  • The Small Business, Enterprise and Employment Act 2015
  • Equalities Act 2010 – which consolidated:
    • Disability Discrimination Act 2005
    • Sex Discrimination Act 1975
    • Race Relations Act 1976
  • Transfer of Undertakings (Protection of Employment) Regulations 2006
  • Pensions Act 2008
  • Pensions Act 1995
  • Employment Tribunals Act 1996
  • Health & Safety at Work etc. Act 1974
  • Trade Union and Labour Relations (Consolidation) Act 1992
  • Data Protection Act 2018
  • Public Interest Disclosure Act 1998

What are the common HR compliance issues?

colleagues chatting to each other and laughing in the office

HR compliance issues come in all shapes and forms, and more often than not, they are dependent on the size of the organisation, the industry it operates in, and employee behaviour.

Unfair dismissals

Mr J Thornhill v London Borough of Camden: 2200088/2018

Poor communication led to an employer being liable for £100,618.18 in lost wages. The employee was a council manager. His superior alleged that the worker failed to notify his employer of irregular bidding in a procurement process. The employer further claimed that the employee omitted to inform the employer of his interactions with one of the enterprises bidding in the tender process.

In this case, the Tribunal concluded that the investigations that culminated in the employee’s dismissal were substantially faulty. The council-manager had already gone to great lengths to explain the situation. The Tribunal ordered that the employee be reinstated and compensated £100,618.18 in lost wages.

Discrimination in the workplace

Michalak v General Medical Council and Others [2017] UKSC 71

The Tribunal found that a doctor from Poland working in the UK was subjected to racial discrimination by her colleagues who persistently referred to her Polish origin, questioning her competency as a doctor.

The Tribunal subsequently ordered the employer to give the employee a public apology and compensate her for the unfair dismissal and discrimination, to the tune of £4.5m.

Wrongful classification of contractor vs worker

Pimlico Plumbers Ltd and another v Smith [2018] UKSC 29

The case involved a heating engineer, Mr. Smith. The engineer worked for Pimlico, a large plumbing company, from 2005 to 2011. The arrangement involved some features of an employment arrangement such as a uniform and an expectation to complete tasks personally; however, Mr. Smith was characterised as an independent contractor in the written agreements.

The two parties fell out, and Mr. Smith brought a claim before the Tribunal alleging (A) unfair dismissal, (B) discrimination based on disability, (C) underpaid wages, and (D) payment for accrued holidays.

The Tribunal determined he was not “an employee” and thereby could not sue for unfair dismissal. However, on statutory definitions, the Tribunal found the engineer was “a worker” and was thus entitled to the other claims, such as holiday pay. Pimlico were found liable for additional unforeseen costs.

Are there minimum wage and hour laws in the UK?

office scene with everyone at their desks hard at work

Yes, there are. The statutory minimum wages are determined by age and rise annually.

As of 1 April 2023, the national minimum wages will be:

  • Apprentice: £5.28
  • Below 18 years: £5.28
  • Between 18 to 20: £7.49
  • Between 21 to 22: £10.18
  • Above 23: £10.42

Employers must ensure that all workers are paid these rates, and failure to do so can result in penalties and legal action.

In addition to minimum wage laws, there are also laws in the UK that govern working hours, breaks, and holiday entitlements. The Working Time Regulations (WTR) set out the maximum number of working hours per week, which is 48 hours on average, although workers can opt out of this limit through a written ‘opt-out’ agreement if they wish.

Other employee rights with regards to working hours include:

  • Night workers should not work more than an average of 8 hours per 24 hour period.
  • Minors should not work between the period of 10 pm and 6 am.
  • Workers are entitled to the following rest periods/breaks:
    • At least one full day’s rest per week.
    • A daily rest period of not less than 11 consecutive hours in each 24-hour period.
    • A 20-minute break away from their workstation after six hours worked.

Creating an HR compliance checklist

woman typing on her laptop at her desk

Why is it important to create a HR compliance checklist? Doing so can help you ensure that you are adhering to HR compliance laws and avoid running into potential legal issues.

Here are some steps to create a HR compliance audit checklist:

1. Review current employment contracts and policies

Employers should review their current employment contracts and policies to ensure that they are up to date and comply with current UK employment law.

Do you have a dedicated HR compliance team that can take charge of handling all these regulations? It’s vital that they keep the organisation’s contracts and policies up to date at all times.

2. Check minimum wage rates and working hours

The HR department should be regularly checking that employees are paid at least the minimum wage rates, and complying with working hour regulations.

3. Conduct right to work checks

As an employer, you must get your HR department to check that a job applicant has the legal right to work in the UK before you employ them. You could face a civil penalty if you employ an illegal worker and have not carried out a correct right to work check.

There are three ways to do so, you can:

4. Check compliance with discrimination laws

There are anti-discrimination laws in the UK. Discrimination is prohibited under the Equality Act 2010, which protects individuals from discrimination based on the following nine protected characteristics:

  • Age;
  • Disability;
  • Gender reassignment;
  • Marriage and civil partnership;
  • Pregnancy and maternity;
  • Race;
  • Religion or belief;
  • Sex; and
  • Sexual orientation.

The Act applies to all aspects of employment, including recruitment, training, promotion, and dismissal. As an employer, you must ensure that you do not discriminate against any employee or job applicant on the basis of their protected characteristic. This includes indirect discrimination, harassment, and victimisation.

You are also required to make reasonable adjustments for employees with disabilities, to ensure that they are not placed at a disadvantage in the workplace.

5. Review data protection policies

Data security is of utmost importance in today’s digital world. Do your data protection policies and procedures comply with the Data Protection Act 2018 and protect your employee’s personal data? Review them to ensure compliance obligations are met, and all your HR data is securely stored.

6. Conduct health and safety assessments

In the UK, employers have a legal obligation under the Health and Safety at Work etc. Act 1974 and the Management of Health and Safety at Work Regulations 1999 to ensure the health and safety of their employees while they are at work. As part of this obligation, it is essential for employers to conduct regular health and safety assessments in the workplace.

7. Review redundancy and dismissal policies

You should also be reviewing your redundancy and dismissal policies to ensure HR compliance, and follow a fair and lawful process.

Ultimately, by creating a HR compliance checklist, you can identify any areas where you may be falling short of regulatory compliance and legal obligations, and take the necessary steps to rectify them. Review and update this checklist regularly to ensure you’re always on top of your compliance responsibilities.

Employment Hero can help you keep up with HR compliance

Businesses constantly face compliance challenges, and keeping up with changes to existing laws and regulations can be taxing. Why not find a better way to maintain HR compliance, by taking HR digital and utilising HR cloud software like Employment Hero?

Employment Hero is an all-in-one HR and payroll software that can help your organisation stay compliant with local regulations. By leveraging the power of automation, our platform can streamline processes and store all your confidential documents digitally — from employee contracts to policies, performance and leave management, payslips and more.

Having a HRIS also enables employee self-service, which allows your employees to access important documents anytime and anywhere for a fuss-free experience.

Let us help you take the guesswork out of HR compliance, so you can address any business risks before they become a problem.

Download the essential guide to HR compliance in the UK today.

Download the essential guide to HR compliance
Download the essential guide to HR compliance
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