Outsourcing HR

  • Business Advice
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Peninsula Team, Peninsula Team

(Last updated )

Running a successful business isn't easy. There are many laws, procedures, and policies that you must comply with. It’s for this reason many business owners choose to outsource their human resources (HR), relying on experts to handle it for them.

With Peninsula's outsourced HR services, you discover an easier and safer way to manage staff. You'll unlock access to the best HR advice, time-saving software, legal protection, and more. And you enjoy it all for a fraction of the cost of hiring internal HR staff.

And in this guide, we'll discuss outsourcing HR, different HR services, and general HR management.

What is human resource outsourcing?

Human resource (HR) outsourcing is the process of a business buying professional HR processes from an external HR firm. This practice is chosen to avoid the company managing its own internal HR department.

An employer might choose to outsource just one HR function or all of them. Outsourcing services can typically be tailored to whatever suits the needs of the business.

For example, at Peninsula, we can still provide HR support even if you have an HR department. Our team can help you boost efficiency and cut risk, by offering you HR management tools, insured advice, and more.

What types of HR functions are generally outsourced?

There are several types of HR functions that employers generally outsource. For example, a business might outsource the creation of important employment documents to their HR consultancy company.

Let's explore these functions in more detail:

Employment contracts

One HR function businesses choose to outsource is the creation of employment contracts. Whilst they're not a legal requirement (employers must only provide a written statement of particulars of employment to new and existing staff members) they're effective in managing staff.

Not to mention, they can protect your legal interests if issues arise. For example, an employee leaves to work for a competitor company, and shares your trade secrets with them. If there is no employment contract with a non-compete clause, you have no grounds to take legal action.

With Peninsula, we can provide all the HR paperwork you need written by employment law specialists. Not to mention, Your Peninsula advisers will regularly review all of your employment documentation for you - guaranteeing your legal compliance even when legislation changes.

Employee handbooks

You can also outsource the creation of your employee handbooks to an HR firm. Employee handbooks provide guidance and details related to the business's:

  • History and mission.
  • Values.
  • Policies.
  • Procedures.
  • Benefits.

Whilst not a legal requirement, employee handbooks are an effective tool to use for staff throughout their time working for you.

Not only does it act as a point of reference for new recruits, but it also helps them get acquainted with what you expect from employees in your workplace.


Every business needs an effective payroll. You need to ensure that employees are paid correctly, and on time. If you don't, employees can take legal action via an employment tribunal, and as a result, you might have to pay financial compensation.

If you employ a large number of workers, it might be even more difficult for you to spend time running an effective payroll.

So, outsourcing it to an HR firm can be beneficial - and helps to avoid legal damages.

What are common HR issues?

There are several common HR issues that businesses have to face. For example, they might struggle to keep their workplace safe, or attract top talent. Other issues include:

But, this is not a limited list, and you might have an issue that's not as common. In these instances, outsourcing HR services like our own could still help you - it's just important you prepare beforehand, and do your research.

How to outsource your HR

There are a range of factors to consider before you decide to outsource your HR, such as confirming what existing policies you already have.

These factors include:

Document your existing HR activities

The first step to outsourcing your HR is to document your existing HR policies, activities and documentation. This should include noting what you or your internal HR employees currently do and what processes they oversee.

This will help your new provider to understand what HR functions are currently present within your business. And helps them to consider what new HR processes your business could benefit from.

Make a checklist of your ideal HR provider

The next step you should take when preparing to outsource your HR is to make a checklist of your ideal HR provider. Think about what tools you do and don't have at your disposal.

For example, Peninsula offers a range of services, such as:

  • HR software that lets you approve holidays, pull absence reports and track overtime.
  • Tribunal support should you ever have issues with a current or former employee.
  • Risk assessment services to ensure your workplace is Health & Safety compliant.
  • Organising a Health & Safety advisor to attend and perform a risk assessment of your workplace.

Either way, considering what HR improvements your business needs to make will help you mould your ideal provider.

Why should you outsource HR services?

There are several reasons why you should outsource your HR services, such as helping to save time and money. Let’s explore these benefits further:

Cut costs

One benefit of outsourcing to HR consulting firms is that it can cut costs for your company. Whilst you pay for the services, in the long term, it can be more cost-effective.

For example, outsourcing removes the need for extra office space and additional personnel, so can result in substantial overhead savings.

Less time-consuming

Using an HR consultancy firm can also prove to be less time-consuming. If you use an external provider, you won't have to plot HR administration into your workload.

For example, if you have an external provider overseeing your HR, you won't spend as much time enforcing your policies. Which, ultimately provides you with more time to focus on your clients, customers, and business responsibilities.

Ensures compliance

Finally, outsourcing your HR services will help you to ensure you meet your legal requirements as an employer. For example, if you don’t have a Health & Safety policy in place, they'll be able to advise you on what you need to include, as well as what tasks you must perform.

Most HR consulting firms have processes that span the entire employee lifecycle, such as Peninsula. With our support, you know you'll be covered no matter your employee, or the situation.

Get expert advice on outsourcing HR from Peninsula UK

Whether you're a large or small business, if you decide to use outsourced HR services, you should ensure it's with a trusted, reliable company. To do so, consider what you're looking for from a potential provider. If you don't manage your HR properly, whether you outsource it or keep it in-house, your business mightn't comply with employment law.

For example, you might breach your employment contract with a staff member. If this happens, they could raise a breach of contract claim against you at an employment tribunal. Consequently, you could face financial and reputational damages.

Peninsula offers expert advice on outsourcing HR for large and small businesses. Our service teams provide 24/7 HR advice which is available 365 days a year. We can help you find a solution when you work with our HR team.

Want to find out more about human resource management and HR support? Contact us on 0800 028 2420 and book a free consultation with one of our HR specialists today.



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