Top 5 HR issues in SMEs – and how to solve them

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Follow these top HR tips and queries for SMEs.

Holiday entitlement and calculations

Undoubtedly one of the top HR issues we receive queries on across all our clients is holiday entitlement, particularly for those who don’t work full time hours. Clients often need to know how to calculate bank holiday entitlement for part timers, or how much holiday casual workers should accrue and how to record it.

Top Tip: Treat part-time employees the same as you treat full-time employees. This doesn’t mean they should receive the same holiday entitlement as full time workers. However, they should receive pro rata of the same entitlement based on the hours they work. Remember that zero hours or casual workers all accrue holiday as well.

Self-employed or employed?

A great deal of small businesses define people as being self-employed, (thinking this is an easier arrangement). However, many of these should in fact be working under an employment contract. The nature of the relationship between the parties as it happens in reality (rather than what it says in a ‘self-employed’ agreement) is what would stand here if challenged. A business could be liable for fines and backdated payments should they be caught out.

Top Tip: make sure you understand the true nature of a self-employed relationship. Use the correct contract types for the relationship, and check regularly to ensure self-employed contractors haven’t drifted into employment because of the regularity of work you offer, for example.

What HR documents to have

Many employers fail to realise even the minimum legal requirements for paperwork they must have in place. This includes a statement of terms of employment or contract, a disciplinary policy, a grievance policy, and a written Health and Safety policy if they employ five people or more.

Top Tip: Know the minimum legal requirements, and consider bespoke contracts and policies to afford additional protection for your particular business and to ensure your own requirements are met.

Who the best managers will be

Very often, the individual who is “best” at the skill or area they work in gets promotion to be a manager. We see it time and again in countless businesses, across all industries. All well and good, but do those managers ever receive training on how to manage staff? Do they even want to be in charge of a team? It’s worth asking those questions before promoting. Someone who’s the best at their job might not be the best person to manage a team of people – there are often very different skills and attributes involved.

Top Tip: Think before you promote! Consider specialist training for someone to be promoted. This will ensure they have the skills to manage people effectively – this can save a lot of difficulty later on.

How to get more from staff

It’s an ongoing process to ensure employees are performing well and are motivated. This is particularly important in small businesses without big budgets for salary increases or bonuses. Making sure all the staff you have are working to the best of their ability has a huge impact on business performance (and therefore profitability) as a whole.

Ensure this by:

  • making sure job descriptions are up to date,
  • ensuring appraisals are carried out regularly and include meaningful objectives,
  • ensuring communication with employees is two-way and regular – to name but a few!

Top Tip: Engage employees as individuals and  find out what motivates them using a tool such as Motivational Maps. Reward them according to what each individual’s priorities are. A hint: it doesn’t always cost you money!

These are just a few of the HR issues we get asked about on a regular basis. Get in touch to find out more or visit the website here for more information.


Kirsten Smith | 07713 133075 |

Dawn Cross | 07725 366049 |

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