What Are My Responsibilities as an Employer? A Straightforward Guide for Small Business Owners

If you run a business and employ people, you’ve probably asked yourself: “What exactly are my legal responsibilities as an employer?” Whether you’ve just hired your first employee or you’re growing your team, understanding your obligations is essential—not just to stay compliant, but to create a workplace where people want to work.

This guide breaks down your key responsibilities as an employer in the UK, covering legal requirements, best practices, and what happens if you don’t follow the rules.

1. Providing Employees with the Right Contract & Documentation

One of the first things you must do when hiring an employee is provide them with a written statement of employment particulars (essentially, their contract). Under UK law, this must be given on or before their first working day and should include:

• Job title and description

• Working hours and pay

• Holiday entitlement

• Sick pay and absence policies

• Notice periods

• Disciplinary and grievance procedures

For more details, read: The Importance of Employment Contracts

2. Paying Employees Correctly & on Time

Payroll mistakes are one of the most common headaches for employers. You must:

• Pay at least the National Minimum Wage or National Living Wage

• Provide itemised payslips showing gross pay, deductions, and net pay

• Deduct income tax and National Insurance through PAYE

• Keep payroll records for at least three years

Many small businesses outsource payroll to ensure compliance and avoid errors.

3. Ensuring a Safe & Healthy Workplace

Under the Health and Safety at Work Act, you are responsible for keeping your employees safe while they’re at work. This includes:

• Assessing risks and taking preventative measures

• Providing health and safety training where needed

• Reporting serious workplace incidents to the Health & Safety Executive (HSE)

• Making reasonable adjustments for employees with disabilities

If you have five or more employees, you must have a written health & safety policy.

4. Managing Holiday, Sick Leave & Family-Related Leave

Your employees have legal rights to time off, and it’s your job to ensure they get what they’re entitled to:

• Holiday Entitlement: Full-time employees get at least 28 days paid leave per year (including bank holidays).

• Sick Pay: Employees may qualify for Statutory Sick Pay (SSP).

• Maternity/Paternity Leave: Employees may be entitled to Statutory Maternity or Paternity Pay and leave.

• Neonatal & Parental Leave: New legislation from April 2025 introduces additional rights for parents.

For more details, read: Guide to Employee Leave Entitlements

5. Handling Employee Rights & Fair Treatment

Employees are legally protected from discrimination, unfair treatment, and workplace harassment under the Equality Act 2010. This means you must:

• Ensure no discrimination based on age, gender, race, religion, disability, pregnancy, or other protected characteristics

• Make reasonable adjustments for employees with disabilities

• Have a clear grievance procedure so employees know how to raise concerns

Ignoring these responsibilities can lead to costly tribunal claims, so having clear policies in place is essential.

6. Managing Disciplinary & Dismissal Processes Fairly

If an employee isn’t meeting expectations or a role is no longer needed, it’s important to follow a fair and legal process - especially if they have more than 2 years’ service.

• Disciplinary Policy: This is a legal requirement, and it must outline how disciplinary issues are handled.

• Warnings Before Dismissal: Employees should be given the chance to improve unless it's gross misconduct.

• Fair Redundancy Process: If you need to make redundancies, you must follow a structured approach, including consultation and fair selection criteria.

If you fire someone unfairly, they could take you to an employment tribunal, which can be costly and time-consuming.

For more details, read: Understanding Disciplinary Procedures

7. Keeping Employee Data Safe (GDPR Compliance)

As an employer, you handle sensitive personal data, such as payroll details, medical records, and performance reviews. Under GDPR laws, you must:

• Only collect necessary employee data

• Keep personal data secure and confidential

• Inform employees how their data is used

• Delete data that’s no longer needed

Failing to comply with data protection laws could lead to fines from the Information Commissioner’s Office (ICO).

What Happens If I Don’t Meet My Employer Responsibilities?

If you don’t follow employment laws, you could face:

• Legal fines – for non-compliance with contracts, payroll, or workplace safety laws

• Employment tribunal claims – from employees who feel unfairly treated or dismissed

• Reputational damage – unhappy leavers may talk about it online, affecting hiring and customer trust

• Financial risks – back pay claims, legal fees, and compensation payouts can add up

• Reduced morale– Employees that dont feel taken care of have low morale which will impact work output and customer/client satisfaction.

The best way to stay compliant and avoid legal risks is to seek expert HR support before issues arise.

Thinking About Bringing in HR Expertise?

This might feel like a lot to manage—especially if you’re running a growing business. Depending on the size and complexity of your business, you might be considering whether to bring in an in-house HR professional or outsource HR support.

To help you decide, take a look at our article on In-House HR vs. Outsourcing. It outlines:

• The pros and cons of each approach

• The level of HR support different-sized businesses typically need

• A salary calculator to help you assess the costs of hiring in-house vs. outsourcing

If you’re not sure which route is best for you, this guide will help you weigh up the options.

If you would like to talk through these options in more detail you can also book a virtual coffee here