Lack of budget. Lack of resources. Lack of time.
When it comes to managing HR, these are a few of the things small businesses (SMEs) have to contend with.
Now, HR is complicated enough, with new legislation shaking up the workplace and day-to-day people management already requiring an enormous amount of effort.
It’s no surprise we’re seeing headlines like ‘a third of HR professionals are considering quitting due to burnout’, and ‘more than 40% of HR teams feel overwhelmed’.
Every business will have its own set of unique challenges.
While we can’t cover them all in this blog, I’ve sat down with our HR experts to discuss three of the biggest issues SMEs are currently facing.
1) Limited employment law confidence
We’ve found that many small businesses are lacking confidence in keeping up with employment law.
Not only are there regular updates to things like National Minimum Wage (NMW), but the Labour Government’s Employment Rights Bill (ERB) is also going to bring a seismic shift to the UK workplace.
Notable changes from the Employment Rights Bill include:
- Ending zero-hour contracts
- Tackling fire and rehire
- Fairer flexible working
- The Fair Work Agency
- Strengthening Statutory Sick Pay (SSP)
Employment Rights Bill roadmap
The Employment Rights Bill is expected to be passed this autumn, which is when the changes will commence.
The roadmap suggests the measures will be implemented in four stages:
- Stage one (expected autumn 2025): repeal of some previous trade union laws and new protections for industrial action
- Stage two (expected April 2026): day one paternity leave, Statutory Sick Pay (SSP) changes, a new Fair Work Agency and simplified trade union recognition
- Stage three (expected October 2026): new rules on fire and rehire and further union-related changes
- Stage four (expected 2027): complex changes, including zero-hours contracts reform and day-one protection from unfair dismissal
Peyton Inglis, HR Consultant, IRIS Software Group, commented: “Whilst much of the detail is still to be confirmed through the introduction of secondary legislation, the message to employers is abundantly clear.
“There will be new legal risks for employers to navigate a more assertive enforcement regime, increased administrative demands for businesses & HR professionals and greater protections for workers.”
2) The multi-hat HR professional
In many small businesses, HR professionals have to take on generalist roles, simultaneously managing payroll, people management, office administration and finance.
This comes from necessity as there simply isn’t scope to build out a larger team; small businesses can’t afford the luxury of specialised roles that larger organisations enjoy.
The consequence? Simply put, there’s too much to do, and a single person is inundated with far too many responsibilities, often leading to burnout, poor wellbeing, errors and a lack of strategic action.
3) Working closely with founders and CEOs
Stakeholder management is a huge challenge in SMEs.
Unlike larger organisations where HR have an established hierarchical structure, many HR professionals in small businesses often report directly to company leadership.
As such, they have to simultaneously serve as the bridge between strategic business objectives and practical people management.
This creates a complex dynamic.
Business leaders often seek quick, immediate decisions, whereas HR needs time to research, consult regulations and provide compliant guidance.
The SME business workshop: optimise HR & payroll
Want answers to these issues?
The challenges facing HR professionals in UK small businesses are significant but not insurmountable.
In our upcoming webinar, we’ll be exploring all these issues in greater detail, offering tangible advice.
The webinar will also cover a wide array of other topics, including:
- Strategies to save time and resources (automation & self-service)
- Small business kit (one-stop-shop solution approach)
- Creative solutions for attracting talent on a budget
- Integration & add-on opportunities
- Performance management for lean teams
- Q&A session
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