Hidden HR Risks: Avoid Getting Blindsided (and stay out of tribunal)

Every successful business reaches that exciting moment when you need to hire your first employees. But this milestone can quickly turn into a nightmare if you make the wrong moves.

The truth is, most founders approach team building like they approach everything else - with passion, intuition, and a "figure it out as we go" mentality. This works for product development and customer acquisition. But when it comes to people management, this approach can literally cost you your business.

The stakes are higher than most founders realise.

- Discrimination accusations
- Unfair dismissal claims
- Missing or non-compliant policies and procedures that result in massive payouts, even if you settle before the case gets to the employment tribunal.

These aren't just scary stories - they're real risks that destroy businesses every.single.day.

This is what I do. I’m like the fastfounders insurance policy against burning down something they worked so hard to build. 

Quick story (names changed because - well, tribunal). Let’s call this smart founder “Susan”, who learned this lesson the hard way. She'd built a thriving marketing consultancy from her spare bedroom to a six-figure business in just two years. When she finally had the revenue to hire her first full-time employee, she was thrilled. 

• She posted on job boards

• Conducted interviews over coffee

• Hired someone who felt like a great cultural fit.

Susan figured she'd learn the HR stuff as she went along. After all, she'd figured out everything else about running a business, right? She created an employment contract by copying one she’d found online and set up payroll through a basic service. She established policies by gut feel and handled performance conversations whenever issues came up.

Everything seemed fine until her employee filed a discrimination claim after Susan had to let them go during a slow period. 

Suddenly, Susan discovered that her copied contract had gaps, her policies weren't legally compliant, and her informal approach to documenting interactions left her completely exposed. The legal fees alone nearly bankrupted her, and the stress consumed months of her life.

This is when Susan was referred to me by one of my other clients whom I’d helped grow their business to multiple locations across Europe without the headache (or fear) that typically ensnares smart Founders with Human Resources.

As an HR professional who provides fractional HR direction and leadership development to businesses exactly like Susan’s, this is something I see all the time with my clients.

Founders who are brilliant at building products and serving customers often assume they can “wing” the people-side of business too.

That's when I stepped in to help Susan rebuild her HR foundations properly. 

We established:

• Compliant policies

• Created proper documentation systems

• A structured approach to hiring and managing people.

More importantly, we developed her leadership skills so she could manage her team effectively while staying legally protected.

Within six months, Susan had successfully hired two new employees, established clear performance standards, and created the kind of workplace culture that attracts great talent. Her business not only recovered but grew stronger because she finally had the right people and practices in place.

Avoid the pain Susan had to endure…

If you're building a team or planning to hire soon, these questions can save you from costly mistakes:

1.Are you treating HR compliance as a luxury rather than a necessity for business survival?

It's important because non-compliance isn't just about fines - it's about the very survival of your business. One wrongful unfair dismissal or discrimination claim can drain your resources, damage your reputation, and destroy years of hard work. 

It's kind of like building a house without a foundation. Everything might look great on the surface, but when the first storm hits, the whole structure collapses.

2.Do you believe that good intentions and treating people well are enough to protect your business legally?

It's important because employment law doesn't care about your intentions - it cares about your actions, documentation, and compliance with specific legislation. You can be the most well-meaning employer in the world and still face serious legal consequences.

It's kind of like driving without insurance because you're a careful driver. Your good intentions won't protect you when something goes wrong.

3. Are you assuming you can learn HR and leadership skills through trial and error without professional guidance?

It's important because the cost of making mistakes with people is exponentially higher than any other area of business. You can pivot a product or change a marketing strategy easily, but HR mistakes create legal liabilities that can follow you for years.

It's kind of like performing surgery by watching YouTube videos. Some skills are too critical and complex to learn through experimentation.

FACT: Every day you operate without proper HR guidance, you're rolling the dice with your business. 

The Good News: getting ahead of these issues isn't as complicated or expensive as most founders think.

The smartest founders I work with don't wait until they have problems to get HR support and guidance. They build their people-practices properly from the beginning, so they can focus on what they do best; growing their business, while knowing their team is managed compliantly and effectively.

If you want to avoid the costly mistakes that derail so many growing businesses, grab my free "Essential Hiring Checklist", It covers the essential policies, procedures, and legal protections you need before making your first or next hire. This checklist has saved countless businesses from expensive mistakes.