Human Resource (HR) policies – they’re not the most exciting things. And they’re probably not something you’ve considered given the number of other tasks and issues you juggle as a small business owner.  But they’re important to have, and if you wait until you have an hr issue – it’s too late.


What are HR policies?

HR policies are guidelines for the management, conduct and behaviour of employees. They outline expectations for actions and behaviours and address how non-compliance will be handled. They can also outline processes around matters such as leave, pay and performance.


Why do you need HR policies?

You may think that as ‘sensible adults’ your employees know how to behave – but unfortunately it’s not always the case. The mix of backgrounds, cultures, upbringings, education and experiences see all of us develop different ideas of what is and isn’t acceptable, and how to conduct ourselves at work. They can cover simple matters such as how an employee notifies you if they’re off sick, or what is acceptable work-wear. Through to more serious matters such as alcohol consumption and discrimination.  Without clear guidelines, employees could inadvertently do the ‘wrong thing’.

Policies also detail how issues will be managed, so that there are clear consequences for unacceptable behaviours or poor performance.  Even if certain behaviours are obviously not acceptable, there could be confusion over their severity.  What you think is a ‘sackable’ offence might be viewed by an employee as something that just warrants a warning.  This type of confusion can easily lead to unfair dismissal claims, so eliminating confusion reduces the risk of such a claim.


Formal policies put everyone on the ‘same page’ and help to avoid misunderstandings and confusion.



Policies help to minimise liability

Having policies around certain issues also reduces the risk of you being held ‘vicariously liable’ for the conduct of your employees. Any steps taken to prohibit unacceptable behaviours (such as bullying and harassment), help to reduce an employer’s vicarious liability. So having clear policies in place, along with regular reminders and training, can not only encourage desired behaviours in the workplace, but also save you from costly and time-consuming legal action.


HR Policies aren’t one-sided

Don’t think that HR policies are all about employee behaviour – they can also outline your obligations as an employer.  How long will it take you to approve/decline leave applications?  How will you calculate and distribute bonuses? What are your views on working from home and how can it be arranged? How will you allocate leave over school holidays if more than one employee wants to take some?

Following set policies also ensures that all employee matters are dealt with the same way.  This is only reasonable and helps to reduce claims of discrimination or unfair treatment.


Your employees are bound by your hr policies so it’s only fair that you are too.


With many small business employing only a handful of staff its easy to think that HR policies aren’t needed.  But in some cases 1 or 2 staff members could represent 30% or more or your ‘workforce’, and a simple issue could become a major problem.  Also, the fines you could face as a result of an unfair dismissal claim or vicarious liability ruling are the same as those faced by larger employers.

At the end of the day you may never need to rely on your HR policies – but like home and car insurance, it’s better to have them and never need them, than not have them when you do.