5 Common HR Mistakes Small Businesses Make (and How to Avoid Them)

After 30 years in HR, one thing's clear: the same problems keep coming up. Different businesses, different people, but the same avoidable mistakes that cost time and money.

Last month, a business owner in Conwy rang me in a panic. They were facing a £4,000 tribunal claim, all because an employee never had a written contract. Nice person, ran a tight ship, treated their staff well. But when things went wrong, there was nothing in writing to fall back on. The employee claimed one thing, the employer remembered another. No contract meant no way to prove who was right.

It's the kind of call we get more often than you'd think. Running a small business means juggling a log, and HR often ends up as an afterthought until something goes wrong. Here are five of the most common HR mistakes we see from local businesses across North Wales, and how to steer clear of them.

No Written Employment Contracts

The handshake deal feels good in the moment. It's personal, and it's based on trust. But when someone leaves or things turn sour, you've got nothing to stand on.

A client of mine swore blind they'd agreed on 20 days' holiday with an employee. The employee insisted it was 28. No contract, so no proof either way.

What to do instead: Issue a clear, legally compliant contract before the employee starts. It should set out terms, expectations, pay, notice periods, and any probation. Get it signed and keep a copy somewhere you can actually find it again. Your future self will thank you.

Using a One Size Fits All Staff Handbook

I supported a business who'd downloaded a free handbook template for their small accountancy practice. It had a whole section on shift patterns and warehouse safety. They'd never actually read it. Worse still, it contradicted their real policies. The handbook said no remote working. Half the team worked from home twice a week.

If your handbook doesn't reflect how you actually operate, it's worse than useless. It becomes evidence against you.

What to do instead: Build a handbook around your actual practices. Use language your team understands, not corporate jargon copied from some multinational's policy. And make sure it gets reviewed regularly, especially when employment law changes. Because it does. A lot.

Avoiding Difficult Conversations

This is the big one. I see it all the time, and it caused the most damage.

One employer told me they'd been putting up with an underperforming member of staff for 18 months. Eighteen months! They kept hoping it would sort itself out. Spoiler: it didn't. By the time they finally said something, the rest of the team were fed up, the employee was blindsided, and what could have been a quick chat turned into a formal process nobody wanted.

Here's the truth: if something is bothering you, the employee probably has no idea. And the longer you leave it, the worse it gets.

What to do instead: Tackle issues early. Sit down with the person, explain what you've noticed, and give them a chance to respond. Keep the tone calm and constructive. Record what was discussed and follow up in writing, even if it's just a brief email summarising the next steps. It doesn't need to be formal or scary. Just clear.

Not Keeping Records

I get it. You're busy. The last thing you want to do after a meeting is write up notes or file away a sick note. But I promise you, the one time you don't bother is the time you'll desperately need it.

A business dismissed someone for repeated lateness. Fair enough, you'd think. Except they had no records. No notes from conversations, no written warnings, nothing. The employee claims it had never been mentioned, and the tribunal believed them. It costs the business thousands by not running a fair process.

What to do instead: Keep basic HR records. Contracts, notes from conversations, time off, and any correspondence. You don't need fancy software; just stay consistent. A simple folder system works fine. Make it a habit, and it stops feeling like a chore.

Not Knowing When to Get Advice

Google's brilliant for a lot of things. Employment law isn't always one of them. The rules change constantly. What was fine two years ago might land you in trouble now.

For example, rules around flexible working requests changed in April 2024, catching a lot of small businesses off guard. Suddenly, the process was different, the timescales were tighter, and a lot of employers go it wrong simply because they didn't know it had changed.

What to do instead: If you're unsure, get professional support. Seriously, a quick chat can often save you hours of stress and a much bigger bill later. Employment law isn't something you want to guess at.

Need a second opinion on something?

Dealing with a tricky dismissal? Not sure if that contract is watertight? We offer pay-as-you-go HR support for businesses across North Wales and beyond. No contracts. No retainers. Just honest advice when you need it.