UK Start-up Advice | Internal or Outsourced HR Support?

Welcome to this 2 minute HR Blast from Jaluch. This time, we offer some advice to international businesses either looking to open their first UK Office or in need of support managing an existing UK based team. It’s a niche HR topic so please don’t read on if this is not for you!

We’re looking at:

  • In-house or outsourced HR support?
  • HR Insurance
  • Employment law support

If you have 70 or more employees then it’s probably worth you looking to recruit your first professional HR person. Not just an administrator, though, but someone with sound knowledge of employment law and employee relations so they can properly support you. Recruitment options are typically online or using a specialist recruitment agency.

If you have less than 70 staff probably your best option is to outsource HR and find a service that you can draw on as and when you need it.

There are many options for outsourcing HR in the UK. Thousands of sole traders (self-employed HR consultants) who offer HR services, 40-50 mid-size HR organisations such as Jaluch that provide a team of HR people and a wider suite of services and also a small number of very large corporate firms that tend to offer telephone help lines rather than face to face support.

Pricing

Prices inevitably vary and, as with much in life, you often get what you pay for – cheap might feel good but you might not get the quality of support or customer service you need. That doesn’t mean you have to spend a fortune though and one of the options you will discover is that there are as many pay as you go services where you pay by the day or hour as there are contract service providers who offer a fixed fee service (which may or may not include insurance cover).

What to outsource

Typically, when outsourcing, our clients are keen to get support and back up with things such as employment law issues, employment documentation such as contracts and policies, dismissing staff, and managing complex HR issues such as long-term absence.

For the more straightforward HR issues, there is a government run helpline called ACAS that is free of charge for both employees and employers that can provide support and also guidance on essential employment policies. In addition, the government provides some online tools for organisations to calculate things such as maternity or redundancy pay.

Organisations tend not to outsource the easier HR tasks such as sending out contracts of employment and managing paperwork around holidays and absence etc. They can be outsourced if you lack admin support, but it might be more cost effective for you to outsource these tasks to a virtual PA than an HR consultancy service.

Insurance Cover

We mentioned earlier that some organisations offer insurance cover alongside HR support. Is this for you?

Pros

  • Can reduce some of the anxiety around employment claims. No guarantee though that in any particular situation you will actually be covered by the insurance policy.
  • Can help with budgeting costs across the year
  • Insurance is often a bit of a gamble, costly, but it could save you tens of thousands of pounds if a claim is brought against you and your insurer takes it on.

Cons

  • Keen to protect themselves and minimise the number of claims, HR advice (in our experience) that is given by insurance providers is seldom commercial, balancing business needs with HR requirements. Instead, it tends to be massively risk-averse advice that is provided.
  • Businesses with insurance cover often find themselves unable to dismiss the person they want to dismiss or manage staff in a way that seems appropriate as the insurer agrees to only very limited actions.
  • It can be incredibly time-consuming to tick all the boxes the insurance cover requires in order for your insurance to remain valid.

Employment law support

UK employment law is incredibly complicated and even managers who have worked in the UK for 20 or more years continue to find it hard and complex.

Much of our employment law comes from European Acts of Parliament that are then enacted into UK Law. Much of it is about interpretation though and in the UK, Case Law (i.e. legal judgements derived from actual cases) is as important as the law enacted through parliament. This makes it very hard for those who are not a specialist in employment law to keep their knowledge updated.

If you breach employment legislation the penalties are varied. If you are lucky you might find the fine is just a few hundred or few thousand pounds. If you are unlucky, or the breach has been very serious, then you could find yourself facing a fine of tens of thousands of pounds. Damages for discrimination claims though are unlimited and it is not unheard of to hear of damages in the hundreds of thousands of pounds. However, often what stings are the legal fees that accompany such damages. You will even have to pick up your own legal fees if you defend a case and win it. Fees vary hugely, of course, but it would not be unusual for a bill of £20-£35K for defending an unfair dismissal claim.

If you want to see some employment tribunal statistics including a number of claims brought and damages awarded, these are published annually by ACAS.

You should also be aware that there are some differences in the law that applies in Scotland and also Northern Ireland. Employment law in Wales is identical to employment law in England.

Sourcing legal support

In the UK you can get the legal support you need with staffing issues from a variety of sources:

ACAS – free government helpline that will support with a general understanding of the law but doesn’t advise on individual issues.

HR Consultancies (sole traders to mid-sized firms) Advice in plain English rather than ‘legalese’ and often tailored to the needs of your organisation. Plus they usually visit your offices rather than making you come to them which can be very time efficient when you want to sit around a table with various managers to discuss a complex issue. It also provides an opportunity to build a relationship with them and to ensure they see first hand the culture of your organisation and the work you do which then improves the quality of the advice they give you.

HR Consultancies – large firms – Advice style varies but tends to be less commercial than with smaller firms. you might find yourself talking to someone who has never actually experienced real HR issues but instead relies on online tools to find the answers you need. Advice often supplied by a team in a call centre meaning that you may not get the same advisor twice. Also far less likely to visit you in your offices after the initial sales visit.

Legal Firms – the traditional approach, but often far more costly than using HR consultancies unless you can negotiate a fixed fee. This is a (perceived) safe option for those organisations that are very risk averse and traditional in their approach to seeking business advice. Old style legal firms still have a tendency to create employment documentation in language that is unfathomable to the average employee.

Areas of significant vulnerability for new organisations or those new to the UK

  1. Understanding who has the right to work in the UK and knowing what checks to make
  2. Knowing how to discipline and dismiss staff fairly and within the law
  3. Understanding discrimination laws
  4. Understanding employees statutory rights
  5. Understanding other laws that impact HR management incl data protection, bribery act, and H&S laws.

If you liked this topic, here are some other Blasts from Jaluch you may find useful

Like this advice but need more information, please do call us.

Other services from Jaluch

  • Training for managers – managing absence, managing performance, diversity and inclusion.
  • Psychometric profiling.
  • Support with all types of staffing issues including employment law support.

The information contained within this article is for general guidance only and represents our understanding of employment and associated law and employee relations issues as at the date of publication. Jaluch Limited, or any of its directors or employees, cannot be held responsible for any action or inaction taken in reliance upon the contents. Specific advice should be sought on all individual matters.

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