5 Key Things an HR Audit Will Check in Your Business

A well-structured HR audit is essential for ensuring your business remains compliant, efficient, and aligned with best practices. Whether you’re a small business or a larger organisation, conducting regular HR audits can help you identify risks and improve workforce management.

Here are five key areas an HR audit will check in your business:

1. Compliance with Employment Laws

One of the most critical aspects of an HR audit is ensuring that your business complies with UK employment laws and regulations. Failure to adhere to legal requirements can result in fines, lawsuits, or reputational damage.

An HR audit will typically review:

• Employment contracts – Are they legally compliant and up to date?

• Working hours and pay – Do they meet minimum wage and working time regulations?

• Equality and diversity policies – Are anti-discrimination policies in place and enforced?

• Health and safety compliance – Are risk assessments and workplace safety policies adequate?

Ensuring compliance helps protect both the business and employees from potential legal disputes.

2. HR Policies and Procedures

HR policies serve as the foundation of a well-run organisation. An audit will evaluate whether your policies are clear, legally sound, and aligned with industry best practices.

Key areas reviewed include:

• Employee handbook – Is it updated and accessible to all employees?

• Disciplinary and grievance procedures – Are they fair, legally compliant, and consistently followed?

• Absence and leave policies – Do they cover statutory sick pay, parental leave, and flexible working?

• Performance management processes – Are appraisals and feedback systems effective?

An effective set of HR policies ensures consistency and fairness in the workplace while protecting the business from legal risks.

3. Record-Keeping and Documentation

Accurate and secure HR records are essential for compliance and operational efficiency. An HR audit will check:

• Employee files – Are they complete, well-organised, and securely stored?

• Right to work checks – Are all employees legally allowed to work in the UK?

• Payroll and tax documentation – Are records accurate and compliant with HMRC requirements?

• Training and development records – Are employee qualifications and training logs properly maintained?

Poor record-keeping can lead to compliance issues and difficulties in managing employee relations effectively.

4. Workplace Culture and Employee Relations

A successful HR function goes beyond compliance—it also fosters a positive workplace culture. An HR audit will assess:

• Employee engagement levels – Are staff satisfied and motivated?

• Turnover rates and retention strategies – Why are employees leaving, and how can retention be improved?

• Internal communication effectiveness – Are employees well-informed about company policies and changes?

• Diversity and inclusion initiatives – Are equal opportunities actively promoted?

Understanding employee sentiment and addressing concerns proactively can help create a thriving work environment.

5. Health, Safety, and Wellbeing Policies

Ensuring the safety and wellbeing of employees is a legal and ethical responsibility. An HR audit will review:

• Health and safety risk assessments – Are they regularly conducted and updated?

• Mental health and wellbeing support – Are there policies in place to support employee wellbeing?

• Workplace flexibility – Are hybrid or remote working policies appropriate and fair?

• Reporting mechanisms – Are there clear procedures for reporting workplace incidents or concerns?

A proactive approach to health and safety not only ensures compliance but also enhances employee morale and productivity.

Final Thoughts

An HR audit is a vital tool for identifying risks, improving efficiency, and fostering a positive workplace culture. By focusing on these five key areas—compliance, policies, record-keeping, employee relations, and wellbeing—businesses can ensure they remain legally compliant and create a better working environment for employees.

Looking for a HR Audit for your business?

If you’re unsure whether your business meets best practice standards, Swan HR Consultancy can help. Contact us today to arrange a comprehensive HR audit and take the first step toward a stronger HR framework.