It's pretty surprising to learn that 12 per cent of small companies fail to issue contracts of employment to their staff.

A larger proportion (32 per cent) of small business owners admit they fail to update HR policies and procedures on a regular basis to ensure they adhere to changes in employment law, according to research from business services company Peninsula.

Such a cavalier attitude might in part be explained by 64 per cent of business owners believing they will never be taken to employment tribunal. That a lackadaisical approach to HR is ok as they are unlikely to be punished for it.

It's not like there is an option though. As Alan Price of Peninsula notes, companies that fail to issue contracts of employment are breaking the law; it's as simple as that.

It's understandable that some things may slip through the net. When your day consists of balancing a maelstrom of entrepreneurial ideas with endless paperwork, HMRC hoop-jumping, serving customers and maybe even a private life to boot, things that are perceived as not absolutely central to the cause might be swept under the carpet to be revisited tomorrow - or later.

But if you are reading this and don't have contracts for your staff, it's best to wise up. You have a legal responsibility to your workers, and HR disputes can only be fought and won if there are watertight HR policies and procedures in place.

So do it, and make sure that procedures are communicated, updated and enforced correctly. Policies should be seen as a communication tool between employer and employee, setting a platform to communicate what you expect from your employees from hours to dress code. Policies also need to form the basis of a relationship, and your employees should agree to the content.  

If an employee does have a grievance, then watertight HR policies can help to determine whether procedures were followed. Financial penalties may be large and company reputation may be damaged.

Here's a piece on what should be in an employment contract that might help if you're one of the negligent ones. 

See also: SMEs up to speed on discipline rules