5 Common HR Problems in Small Businesses (UK) and What to Do First
- hrbytj
- Apr 8
- 3 min read
Updated: Apr 9
Contents
Common HR Problems in Small Businesses (UK)
When you’re running a small business, you’re often the CEO, CFO, marketing department and everything in between. So when HR manager gets added to the list, dealing with HR problems can feel overwhelming.
Most owners I speak to are stuck between not wanting to be “the bad guy” and not wanting the business to suffer. That tension is completely normal, but it’s also where mistakes can happen.
Below are five of the most common HR challenges small businesses face, along with clear, practical guidance on what to do first.
1. “Can I dismiss an employee?”
This is one of the most common questions I hear, usually when tensions are high, but the answer is rarely a simple “yes”.
Whether dismissal is fair and lawful depends on several factors, including:
How long they’ve worked for you - Most employees gain unfair dismissal protection after two years (reducing to 6 months on 1st January 2027), but discrimination claims have no minimum service.)
The reason for dismissal (Conduct, capability, redundancy, etc.)
Whether you’ve followed a fair and reasonable process (As set out by the ACAS Code of Practice.)
Even during probation, you must still act reasonably, communicate clearly, and avoid any in the moment decisions.
What to do first
Pause and get clarity on the facts before acting. A short conversation with an HR professional at this stage can prevent a costly claim later.
2. “My employee keeps calling in sick… what can I do?”
Frequent or repeated sickness absence is disruptive, especially in a small team. The challenge is balancing compassion and support with business needs, while staying legally compliant.
What to do first
Look at the data - ensure you are tracking absence properly including dates, reasons, patterns.
Request a fit note - if the absence lasts more than 7 calendar days.
Have a supportive conversation - explore whether there’s an underlying issue and what support might help.
Consider your legal duties - if the condition may amount to a disability, you must consider reasonable adjustments.
A clear sickness absence policy can make managing this process far easier and ensures consistency.
3. “They’re not performing, but I haven’t addressed it yet.”
This is extremely common. When performance concerns aren’t addressed early, they grow and the employee often has no idea there’s a problem. By the time action is taken, the situation feels uncomfortable, and the relationship may already be strained.
What to do first
Have an honest, supportive conversation as early as possible. Be specific about what needs to improve, set clear expectations, and give them a fair opportunity to meet those expectations before moving into a formal process. Early clarity is key and prevents bigger HR problems later.
4. “We don’t have proper contracts in place.”
Many small businesses start with no formal contracts, or documents copied from elsewhere or generated by AI. Unfortunately, this can leave you exposed. Without a compliant contract, there can be uncertainty around:
employment conditions
rights
responsibilities
duties
notice periods
working hours
pay and benefits
A contract of employment (written statement of particulars) is a legal requirement and must be provided on or before day one.
What to do first
Review what you currently have. Check that your contracts reflect current employment legislation and best practice. Clear, up‑to‑date contracts protect both the business and the employee and prevent misunderstandings later.
5. “There’s been a complaint or grievance.”
Grievances can feel personal and uncomfortable, especially in a small team. But they must be handled with structure and neutrality.
What to do first
Acknowledge the complaint in writing.
Approach it calmly and objectively.
Follow the ACAS formal grievance procedure.
Where possible, ensure the investigation is impartial, this may mean using an external HR consultant.
A fair, transparent process protects everyone involved and reduces risk to the business.
Final thoughts
Employee issues become far more difficult (and expensive) when they’re left too long or handled informally. The most effective approach is always:
address concerns early
communicate clearly
follow a structured, fair process
get advice before taking action
These steps alone can prevent most HR problems from escalating.
Need HR support?
I support small businesses across Surrey and online. If you’re dealing with a staff issue and want to understand your options or how I can help, you can request a short clarity call.
This article provides general guidance only and shouldn’t be taken as legal advice. Always seek tailored advice for your specific situation.
Comments