Two fifths (40 percent) of firms have no written HR policies, and despite it being a legal requirement, over a fifth (21 percent) of SME employers have no formal contracts in place for permanent employees, rising to 28 percent for those employers using freelance, contract or temporary workers.
 
Jason Stockwood, CEO of SimplyBusiness.co.uk, commented on the findings: “Millions of SMEs are unnecessarily placing themselves in a very precarious position, and face  potential legal nightmares due to a lack of formal HR policies and documentation. “Small businesses are a lot less capable of weathering costly legal action than their corporate counterparts, so it is vital they have the necessary structures and guidelines in place to protect the business.”

The research goes on to reveal that around three quarters (73 percent) of firms have no formal rules laid out in relation to attendance and time keeping, whilst 62 percent have no official policy on sickness, and  nearly three quarters (72 percent) have no written guidelines on business expenses.
 
Stockwood concludes: “By failing to formalise exactly when employees are expected to be at their place of work each day, and what will happen if they fail to meet these expectations, there is the possibility of workers taking advantage of their employers, costing firms valuable man-hours. “The MPs expenses scandal has shown us what can happen when organisations leave expenses rules open to interpretation by employees – firms should tighten policies to ensure they don’t suffer similar abuse.”