HR Compliance Checklist for UK Small Businesses

UK employment law creates specific compliance obligations at every stage of the employment relationship. This checklist covers what you need, when, and how to maintain it - organised so you can audit your current position quickly.

Pre-Employment Compliance

Every hire triggers a set of obligations before the person's first day. These cannot be done retrospectively.

Right to Work

• Complete a right to work check before employment starts (not on day one - before)
• Check original documents in the employee's presence (or use an online check for UKVI-approved online checks)
• Keep a clear copy of the document(s) checked
• Date and sign the copy to confirm when the check was carried out
• For time-limited visas: diarise a repeat check before the visa expires
• Never discriminate by only checking certain nationalities - check everyone

Penalty for failure: Civil penalty of up to £60,000 per illegal worker. Criminal liability if you had reasonable cause to believe the person had no right to work.

Employment Contract

• Issue a written statement of employment particulars on or before the start date
• Include all mandatory particulars: employer name and address, employee name and start date, job title and description, place of work, pay and frequency, hours, holiday entitlement, notice period, pension details, reference to disciplinary/grievance procedure
• Ensure the contract is signed by both parties
• Keep a signed copy on the personnel file

Penalty for failure: Employees can bring a claim to employment tribunal. Compensation of 2-4 weeks' pay. More importantly, without a contract your terms are uncertain, which creates dispute risk.

Employer Obligations Check

• Register as an employer with HMRC if first hire (register before first payroll run)
• Obtain employer's liability insurance (minimum £5 million cover, legally required)
• Display the employer's liability insurance certificate (or make it accessible digitally)
• Assess the employee for auto-enrolment (age 22-66, earnings above £10,000 per year = must enrol)
• Enrol eligible workers into a qualifying pension scheme within 6 weeks of employment starting

Ongoing Compliance

Pay

• Pay at or above the National Minimum Wage (rates change every April - check GOV.UK)
• National Living Wage applies to all workers aged 21 and over (from April 2024)
• Issue payslips to all employees and workers on or before payday
• Payslips must include gross pay, deductions, and net pay
• For variable hours workers, payslips must show hours worked if pay varies
• Pay employees no less frequently than agreed in the contract
• Do not make deductions from wages unless expressly authorised in writing or by law

Current NMW rates (April 2025 - check GOV.UK for updated figures):

Age Band	Hourly Rate
21 and over (National Living Wage)	£12.21
18-20	£10.00
Under 18 (not apprentices)	£7.55
Apprentices (under 19, or first year)	£7.55

Working Time

• Average working week must not exceed 48 hours (over 17-week reference period) unless the worker has signed a voluntary opt-out
• Workers are entitled to 11 consecutive hours rest between working days
• Workers are entitled to a 20-minute rest break if working more than 6 hours
• Night workers must not exceed an average of 8 hours per shift
• Keep records of working hours for workers who have not signed an opt-out agreement

Holiday

• Statutory minimum: 5.6 weeks per year (28 days for 5-day week workers, including bank holidays)
• Part-time workers receive a pro-rated equivalent
• Pay during holiday: at the rate of normal pay (including commission, regular overtime, and certain allowances - not just basic salary)
• Holiday year and carryover rules must be in the contract
• Workers who are off sick during holiday are entitled to reschedule that leave

Sickness Absence

• Statutory Sick Pay (SSP) is payable from day 4 of absence for eligible employees
• SSP rate from April 2025: £116.75 per week (check GOV.UK for current rate)
• Maintain a record of all absences and SSP paid
• Self-certification for first 7 days; GP certificate required for longer absences
• Return to work interviews are best practice (not legally required, but best practice)
• Manage persistent short-term absence fairly and consistently

Auto-Enrolment (Pension)

• Re-enrol eligible opt-outs every 3 years (re-enrolment date)
• Minimum employer contribution: 3% of qualifying earnings
• Minimum total contribution: 8% of qualifying earnings (employee + employer)
• Send a re-enrolment declaration to the Pensions Regulator every 3 years
• Enrol new employees within 6 weeks of their first day if eligible

Required Policies

These are not optional best practice - several have legal basis.

Legally Required

• Disciplinary procedure (ACAS Code of Practice requirement - every employer)
• Grievance procedure (ACAS Code of Practice requirement - every employer)
• Health and safety policy (written policy required with 5+ employees)

Practically Required (High Risk Without)

• Sickness absence policy
• Equal opportunities / anti-discrimination policy
• Data protection / privacy notice for employees (GDPR requirement)
• Flexible working policy (employees have day-one right to request)
• Anti-harassment and bullying policy

Useful for Larger Teams

• Performance management policy
• Expenses and benefits policy
• Social media policy
• Whistleblowing policy (required for regulated sectors; best practice for all)

Record Keeping

How Long to Keep Records

Record Type	Retention Period
Payroll records	6 years after the tax year
Right to work copies	Duration of employment + 2 years
Recruitment records	6 months from decision date
Personnel files (contract, reviews, correspondence)	Duration of employment + 6 years
Disciplinary and grievance records	Duration of employment + 6 years
Accident book entries	3 years from date of incident
Maternity/paternity pay records	3 years after end of tax year

GDPR Compliance for HR Records

• Employees have a right to access their personal data (Subject Access Requests)
• Respond to SARs within one calendar month
• Only collect and retain data that is necessary (data minimisation principle)
• Issue a privacy notice to employees explaining how you use their data
• Secure personnel files (locked cabinet or access-controlled HR system)
• Do not share employee data externally without a lawful basis

Compliance by Headcount Band

Obligation	1-4 Employees	5-24 Employees	25-50 Employees
Right to work checks	Required	Required	Required
Written contracts	Required	Required	Required
Auto-enrolment	Required	Required	Required
Employer's liability insurance	Required	Required	Required
Disciplinary/grievance procedure	Required	Required	Required
Health and safety policy (written)	Not required	Required	Required
HR information system	Recommended	Recommended	Strongly recommended
Dedicated HR support	Optional	Recommended	Strongly recommended

Running Your Own Compliance Audit

Use this process annually or when you have experienced significant growth:

1. Work through each section of this checklist and mark each item as in place, partially in place, or missing
2. For each gap, assign an owner and a completion date
3. Prioritise legal requirements over best practice items
4. Review with employment law advice for anything complex
5. Document that you conducted the audit - this itself has value if a compliance challenge arises

This is guidance, not legal advice. For specific legal obligations, consult an employment solicitor, ACAS, or relevant regulatory body (Pensions Regulator, HMRC, Home Office).