Company policies are there to set standards and encourage best practice in the workplace. All businesses need them to ensure that operations run smoothly, no matter their size or industry. Clear and effective company policies give everyone employed by the business clarity on many important aspects of its running including expectations and standards, legal compliance, and workplace culture and values.
In this article, we will learn more about the importance of having company policies and which company policies are required by law in the UK.
What is the purpose of a company policy?
Company policies act as guidelines that employers and employees can refer to when they encounter workplace issues, including health and safety, employee rights, ethics, and accountability. They also help to establish the principles and standards that shape a company’s identity, define the roles and responsibilities of employers and employees, and form the foundation of the company’s culture.
Reasons that company policies are so important include the following:
Sets expectations – Effective company policies should outline precisely what is expected from the employer and the employee, including their behaviour, actions, and performance in various situations. They should also outline what employees can expect from their employer regarding benefits, rights, and responsibilities. When everyone knows what is expected of them, they can work more efficiently, avoiding misunderstandings and conflicts to achieve their goals.
Comply with laws – Company policies can help businesses to set out rules and best practices that help them to comply with important laws and regulations, including those surrounding health and safety, data protection, anti-discrimination, and environmental protection. Complying with the law helps to protect the company’s reputation and avoid legal penalties.
Consistency – When company policies are implemented effectively, it helps to ensure that employees are treated equally, fairly, and consistently to avoid confusion and conflicts and help foster a happier and more productive workforce. It also helps to establish reliable customer processes and experiences to improve customer satisfaction and retention rates.
Reputation – A robust set of company policies can help a business to demonstrate its values, vision and social responsibility through its actions and decisions. They can also improve a business’s reputation and help it avoid legal issues or ethical dilemmas that could damage its image or credibility.
Reduce risk – Businesses should identify, assess, and manage potential risks or threats when creating company policies. This helps the business to implement strategies that avoid or reduce risks that could cause losses, injuries, liabilities, or damages.
Boost employee morale – Very importantly, company policies also play a large part in shaping a positive and supportive workplace environment where employees feel valued, respected, and appreciated. By boosting employee morale and motivation, company policies can also help to increase employee satisfaction, loyalty, and quality of work.
Company policies required by law UK
Only a handful of workplace policies are legally mandated. Nonetheless, creating, administering, and managing workplace policies is the most effective way to manage compliance with workplace laws and regulations, while also safeguarding the business in the event of a legal dispute. As a result, most businesses choose to implement several company policies. In this section of the article, we will find out a little more about some of the most common workplace policies.
To begin with, we’ll look at the four most important policies that all companies should ensure that they implement at the very minimum.
The four company policies all businesses should have
Health and safety policy
According to the Health and Safety Executive, every business must have a policy for managing health and safety. Yours must outline your business’s general approach to health and safety and how it will be managed. It should also clearly explain who does what, when, and how.
According to the Health and Safety at Work etc. Act 1974 and the Management of Health and Safety at Work Regulations, every employer must maintain a written statement that explains the company’s policy on safety, and the arrangements in place to ensure the policy is implemented, including the responsibilities of individual employees in achieving this.
The policy should be brought to the attention of all employees and regularly reviewed and updated as needed.
Disciplinary, dismissal, and grievance policy
While a policy on disciplinary, dismissal, and grievance issues is not legally required, it is highly advisable because employers have various legal obligations in this area. These legal requirements include:
- Employers must provide a written statement that details employment terms and conditions, including any disciplinary and grievance procedures
- Employers must follow the Acas Code of Practice on Disciplinary and Grievance Procedures
- Employers must comply with relevant laws and regulations affecting the right of employees, including the Protection of Employment Act 1977, the Safety, Health and Welfare at Work Act 1989, and the Organisation of Working Time Act 1997
Implementing a disciplinary, dismissal, and grievance policy helps employers to demonstrate that they have followed a fair and reasonable procedure which complied with the relevant laws, regulations, and codes of practice.
Data protection and privacy policy
According to The Data Protection Act 2018, all businesses and organisations that process individuals’ data must have a data protection and privacy policy. A data protection and privacy policy is a document that tells individuals how a business handles their personal data, including what it does with it, who it shares it with, and how it keeps it safe. It also informs individuals of their rights and options regarding their personal data. A data protection and privacy policy can help businesses to build trust and transparency with customers and employees and reduce the risk of data breaches and misuse of personal data.
Equal opportunities policy
In the UK, The Equality Act 2010 is a law that protects people from discrimination. It is unlawful for businesses to discriminate against someone in the workplace because of one of the nine characteristics listed in The Equality Act 2010. These are: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, or sexual orientation. While no law states that businesses must have an equal opportunities policy, it is best practice to have one to demonstrate your commitment to equality and diversity in the workplace in accordance with the law.
An equal opportunities policy can also help to protect your business against legal action and create a respectful and positive working environment.
Other common workplace policies to consider
Businesses that fail to create or maintain the four most basic company policies listed above could face enforcement action by the Health and Safety Executive (HSE), fines, penalties, or even prosecution. Aside from the essential company policies and procedures discussed above, companies must decide which additional workplace policies are suitable for their business type.
Other common workplace policies include:
- Whistleblowing policy – A set of guidelines protecting individuals who report illegal or unethical activities at work if they believe it to be in the public interest to do so.
- Anti-bribery and corruption policy – A framework that sets out an organisation’s rules and procedures for promoting ethical business practices and preventing and detecting any form of bribery or corruption
- Modern slavery and human trafficking policy – Although businesses with a turnover of less than £36 m are not legally required to produce a modern slavery statement, current government guidance encourages small business to have a Modern Slavery policy or statement. This is because smaller organisations often fall within the supply chain of a larger organisation who may wish to view this statement as part of their modern slavery strategy. aimed at preventing and detecting human trafficking and other forms of slavery within its operations and supply chain. This policy helps ensure an organisation complies with human rights standards and the Modern Slavery Act 2015.
- Flexible working policy – A document that outlines an organisation’s approach to flexible working, including guidance on the flexible working patterns available and how employees can benefit from them.
- Maternity, paternity, adoption, and parental leave policies – Provides information about the support the organisation provides employees with during pregnancy, childbirth, and early parenthood, including details about the length of leave and available financial assistance.
- Absence and sick leave policy – A set of rules and guidelines that help organisations manage employee time off for medical or personal reasons. This policy should provide clear information and advice about the process for reporting, recording, and managing employee sickness and any relevant support available to employees.
- Social media and IT usage policy – A set of guidelines that govern the appropriate way to use social media and technology in the workplace, including information about safeguarding the company’s reputation, network, and data security.
- Environmental policy – A document that outlines what the organisation is doing to protect the environment, reduce its environmental impact, and promote sustainability.
- Substance abuse policy – A document that explains what an organisation is doing to prevent, detect, and respond to substance abuse in the workplace. The policy should explain how to report and deal with employee substance abuse issues and the consequences for violating the policy.
Policies should be regularly reviewed and updated. For example, following a consultation by the Department for Business, Energy and Industrial Strategy (BEIS), at some point in 2023, the government aim to make flexible working the default option. Employees are to be given a greater say over when, where, and how they work. Whenever changes are made to any of your company policies, they should be shared with your employees.
Are company policies legally binding in the UK?
Although companies aren’t legally bound to have HR policies, many policies are there to ensure that a business complies with UK laws and regulations. This means that if a business fails to adhere to its company policies and procedures, it could breach important laws and regulations and be subject to legal disputes or claims.
The information or rules within a company policy would become legally binding if Good practice is to declare HR policies non-contractual so that non-statutory employer obligations do not become legally enforceable via incorporated into an employee’s employment contract.
What policies should a small business have?
Company policies and procedures are essential for businesses of all shapes and sizes, including small businesses, because they help to bring structure, consistency, control, and fairness to the workplace. They also ensure that companies operate in a way that complies with relevant laws and regulations, and provides businesses with invaluable legal protection during legal disputes. There is no absolute number of company policies that your small business requires. The number and type of policies it should have depend on the business’s size, nature, and culture.
Some of the company policies most frequently used by small businesses include:
- Health and safety policy
- Disciplinary, dismissal, and grievance policy
- Data protection and privacy policy
- Equal opportunities policy
- Substance abuse policy
- Social media and IT usage policy
- Absence and sick leave policy
- Environmental policy
To decide which company policies your small business requires, you should identify your business’s legal obligations and any industry-specific policies and best practices. Next, you should conduct a risk assessment to identify any potential hazards or risks your business may face.
Once you have a list of your legal obligations and any potential hazards and risks, you can develop company policies that will help your company comply with its obligations and address, mitigate, or manage the risks it faces. Your company policies should clearly communicate your expectations for employee conduct. Usually, an organisation’s HR department is responsible for creating, implementing, and managing company policies. If your small business is not large enough to have an HR department or your HR department is limited, you may wish to consider outsourcing management of your company policies to a professional HR support service.
Outsource your HR requirements to People Based Solutions
Here at People Based Solutions, we are a Warrington-based business offering small and medium-sized businesses a range of cost-effective, outsourced HR services, including the creation and management of company policies, procedures, and other related documentation.
For more information about any of our HR services for small businesses or to discuss your small business’s HR requirements in more detail, call our team on 01925 202 217 or email enquiries@peoplebasedsolutions.co.uk
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