But there are also some basic requirements
you have to fulfill as a small business owner or HR officer. When people come
to work for you, it’s your responsibility to provide a safe and healthy
workplace, to comply with relevant employment laws in your country, to keep
good records, and to pay salaries and benefits promptly and effectively.
In this tutorial, we’ll dive into these
topics and show you how to comply with these important human resource
requirements in your small business. They may not be the most exciting things
you’ll do in your small business, but they are critical if you want to have
happy, productive employees—and avoid some organizational or legal headaches
down the road.
Note: When you’re reading this tutorial, keep in
mind that it’s aimed at a global audience. Employment laws and other
regulations vary widely depending on the country you’re based in—and sometimes
there are local regulations to be aware of for your city, state, province, etc.
So although we’re going to go through some general examples here, mostly based
on U.S. regulations, be sure to check your local situation, and ideally get
professional legal advice to make sure you’re complying with all relevant laws
in your area.
1. Keep People Safe
If you think occupational safety or “health
& safety” regulations are just about annoying government red tape, here’s a
shocking statistic for you: in the United States in 2015 alone, 4,836 employees died from
injuries sustained in the workplace. (Wondering
about the number of nonfatal cases? It’s 2.9 million.)
Let those numbers sink in for a while.
It should be clear, then, that your first and
most important responsibility as a small business owner is to keep your
employees safe. So in this first section, we’ll go through some basic
principles of occupational safety.
Note: I’m basing much of this information on the
advice in the U.S. Occupational Safety & Health Administration’s excellent Small
Business Handbook. The book itself goes into much more detail, and it’s
free to read online or download as a PDF, so I’d recommend looking at it.
Assess the Risks
Start by analyzing your workplace and the
processes your employees have to follow. Look for potential dangers and make a
Some workplaces are more obviously
dangerous than others—the risks at a manufacturing site where workers handle
toxic chemicals and heavy machinery are easier to see than those at an office,
for example. But in any workplace, things can go wrong.
Every year in the U.S., for example, 27 people die and
over 10,000 are injured by elevators.
Thousands of people injure themselves, sometimes seriously, by tripping over
loose wires, open desk drawers, objects left in passageways, and so on. Poorly
designed workstations and office chairs can leave employees vulnerable to back
pain, repetitive motion injuries,
and other serious ailments. An old or badly maintained building can create any
number of hazards, from faulty wiring to loose ceiling tiles.
So start by compiling
a list of potential hazards. You may be able to have an experienced health and
safety professional visit your workplace and conduct a free survey as part of a
subsidized government program. Or you could pay for a private consultant to do
Encourage employees to
alert you to anything they see in their jobs that is potentially unsafe—they
are the best resource to help you compile the initial safety inventory and then
keep it updated.
Put Controls in Place
Once you’ve assessed
the risks, try to eliminate as many hazards as you can, and where you can’t
eliminate them, at least aim to control them and reduce their likelihood.
Usually this involves
setting up particular procedures that every employee should follow (e.g. when
you’re operating this machine, you must wear eye protection and check that the
safety catch is functioning properly). Then make sure everyone knows the
procedures, that they’re properly documented, and that signs or posters are in
place to remind people.
Here are some other
Make a plan for
regular maintenance of the building and of any equipment that employees use.
Have a plan for
medical emergencies and post emergency numbers prominently.
Train some employees
in first aid procedures and make sure people know who they are and how to reach
Have a procedure for
reporting injuries and make sure people know it.
Train all employees in
health and safety procedures to ensure they know what to do.
Create an emergency
plan and conduct frequent drills.
Identifying the risks and putting controls
in place is great, but what if your employees still don’t follow the right
procedures? It’s critical that everyone takes workplace safety seriously, and
you can set that tone by your own actions.
Demonstrating your commitment to employee
workplace safety will encourage your staff to take the subject seriously too,
and it may help avoid accidents. On top of that, it shows that you value them
and their physical well-being, so it sends a powerful message that may improve
their general happiness and job satisfaction.
So create a clear policy on workplace
safety and health, and post it prominently around the office and on the
intranet or company website. Hold meetings to communicate the policy in person,
and hold managers and employees accountable for complying with it.
Keep reviewing and updating your policy and
procedures regularly, encouraging input and suggestions from employees. And if
you’re requiring people to do extra work to ensure procedures are followed,
make sure they have the time and resources to do that effectively.
Following all of these steps will not
immunize you from workplace accidents, but it will help reduce their likelihood
and create a safer work environment for everyone.
2. Know the Law
Employment laws are a key part of small business human resource requirements and they can be very complex. These laws govern small businesses too, so you need to be up to speed and make sure
you’re complying with all the regulations. Again, we’re going to look at some
general examples here based on U.S. laws, but be sure to check the situation
for your own business, and get individual legal advice if possible.
Equal Opportunity Laws
One of the most common forms of employment
law deals with the issue of equal opportunity. Essentially, you should not
discriminate in your hiring practices based on gender, race, religion, national
origin, age, disability, etc. And you should have clear policies in place to
guard against discrimination and harassment in the workplace. You may also be
required to put up notices in the workplace to inform employees of their rights
and your compliance with the relevant laws.
A few examples of the laws affecting this
area in the U.S.:
Workers in many countries have the right to
organize and bargain collectively or join a union. They often have the right to
be paid overtime if they work extra hours, and to have a certain number of work
breaks during the day.
There may be rules on how much vacation time or other
benefits you have to provide—and if you provide paid vacation and employees
don’t use it, you may have to pay them the monetary equivalent. And there are many more rights, both large and small, that workers have fought for over the years and had codified in law.
Sometimes there are exceptions—for example,
in the U.S., salaried workers are generally exempt from the laws around overtime and work
breaks, and independent contractors are exempt from many of the rules that
apply to permanent employees. But you need to be careful about how you classify
people, because there are rules about that too, and it’s easy to fall foul of
Also, don’t forget about things like
parental leave and medical leave. You must allow employees to take time off
according to the laws in your country, and make sure their job is still
available for them when they return.
We covered the principles of workplace
safety in the last section, but there may also be specific laws and regulations
you need to comply with and posters you need to display in the workplace. So in
addition to the work you do to provide a safe workplace, make sure you’re
following all the relevant rules as well.
3. Keep Good Records
Filing is not the most exciting task you’ll
ever do, but it’s important. The good news is that the requirements are quite
simple—you just need to keep a file (or files, as we’ll see in a minute) for
each employee, containing important information about their employment. And,
most importantly, you’ll need to keep these files very secure, because they
contain sensitive information.
Ideally, you’ll have two separate files for
each employee: one for general employment information, and another for medical
information. (And in some countries, you may need to keep immigration-related
records too.) Here’s what should go in each:
General Employee File
This file gathers all the information
related to a particular employee in one place. You can start it when you hire
them, by dropping in their resume and any hiring documents or forms they’ve
Then you can add documents as you go along,
other contracts or agreements the employee
Employee Medical File
If an employee has a medical condition or
disability that affects their work, you may need to keep medical records, but
you should always keep them in a
separate file in a very secure location.
That’s because medical information is very
personal, and someone who may need to access the employee’s general file should
not see their medical records. So keep this information in a separate file, and
be very strict about who can access this file and why.
In some countries, you may need to keep
proof of a worker’s eligibility to work in the country. In the U.S., for
example, this is called Form I-9.
Because immigration officials can ask to check these forms, you should keep
them separate from the employee’s other information, so that you can just
provide them to the government without giving access to all the employee’s
4. Provide Pay & Benefits
Another basic HR requirement for every small business is to pay
people on time and provide any relevant benefits. We already looked at how
to set pay rates and benefits earlier in this series, but once you’ve done
that, you need to make sure you do the mechanics of it properly.
Firstly, that means paying people on time,
no matter what. As we discovered in my cash
flow tutorial, small businesses often struggle with sufficient cash flow,
but if you manage it carefully and make accurate forecasts, you can ensure you
always have enough on hand. And if you need to delay any payments, employees’
salaries are not the ones to mess with. Paying someone late tells them that
they’re not respected, and/or that the business is in serious trouble. Either
way, it’s a sure way to get them updating their CV and looking for a new job.
But beyond that, you also need to make sure
you calculate the right amount, make the correct tax deductions, keep and
provide the right records, file the right forms with the tax authorities, and
You also need to keep on top of
benefits—give employees the right information and make it easy for them to
access their benefits, and keep track of, for example, how many vacation days
each person has taken out of their overall entitlement. Where benefits are
provided by a third party, such as a health insurance company, you need to make
sure that everybody is enrolled who should be enrolled, and that everything is
running smoothly and people are able to access the help they need.
For more information on running payroll
effectively, see the following tutorial:
In this tutorial, you’ve seen how to comply
with some important human resource (HR) requirements for your small business. You’ve learned how
to keep your employees safe, how to keep on top of employment laws and
regulations, how to keep good records, and how to provide pay and benefits
In the next tutorial in this series
on HR for small business, you’ll learn how to deal with that dilemma no
small business owner wants to face: when a key employee wants to quit. See you