1. Start with the problem, not the product list
Before you book a single demo, write down the three things that are actually going wrong. In most UK small businesses the honest answer is one of these:
- Holiday requests and entitlements live in a spreadsheet nobody trusts.
- Contracts, offer letters and policies are scattered across email and folders.
- Nobody can quickly evidence right-to-work checks or training and certification dates.
- Sickness and absence patterns are invisible until they become a problem.
- Onboarding a new starter depends on one person remembering all the steps.
- Payroll changes are retyped by hand every month, and mistakes creep in.
Rank those three problems. Any system you shortlist must solve them well. Everything else — performance reviews, engagement surveys, org charts, AI assistants — is a bonus you should not pay extra for until the basics are fixed.
2. Know the core features, and which ones you actually need now
HR platforms are usually sold as a core system plus optional modules. The core almost always includes:
- Employee records — personal details, job history, salary, emergency contacts, right-to-work documents.
- Holiday and absence — entitlement calculation, requests, approvals, a shared team calendar, carry-over rules and part-time pro-rata.
- Documents and e-signature — contracts, handbooks and policies with a record of who has read and signed what.
- Self-service — employees update their own details and book their own holiday, which is where most of the admin saving comes from.
- Reporting — headcount, absence rates, turnover, and the ability to export anything you need.
Modules commonly charged as extras:
- Payroll — RTI submissions to HMRC, payslips, pensions and auto-enrolment.
- Time, attendance and rotas — essential in hospitality, retail, care and manufacturing; unnecessary in most office businesses.
- Performance and one-to-ones — useful once you are past roughly twenty-five people.
- Recruitment / applicant tracking — only worth it if you hire regularly.
- Expenses and mileage — check whether your accounting software already does this before paying twice.
Buy the core now and confirm in writing what the modules cost later. Adding a module in year two at an unagreed price is a common and avoidable shock.
3. Decide how payroll fits before you shortlist
This single decision narrows the market faster than anything else. There are three realistic setups:
- All-in-one HR and payroll. One supplier, no double entry, one support line. Best if you run payroll in-house and are happy to move it.
- HR software that integrates with your payroll provider. Keeps your accountant or bureau where they are. Ask to see the integration working, not a logo on a slide.
- HR software with a clean export. Perfectly workable for a small team, as long as the export matches what your payroll provider actually wants.
Whichever route you take, the test is the same: when someone joins, leaves, changes salary or takes unpaid leave, does that reach payroll without anyone retyping it? Speak to whoever runs your payroll before you sign — if you use an external accountant, your accountant or payroll adviser will often have a strong and well-founded preference.
4. Check it handles UK employment rules properly
Plenty of good-looking platforms are built for the US market and quietly get UK details wrong. Test these specifically during the demo:
- Holiday entitlement in days and hours, pro-rata for part-timers and mid-year starters.
- Bank holidays handled correctly, including staff who work variable days.
- Statutory sick pay, and maternity, paternity, adoption and shared parental leave.
- Right-to-work document storage with expiry reminders for visas and sponsorship.
- Working time records where relevant, and TUPE or fixed-term contract handling.
- Auto-enrolment pension data if payroll is included.
- Dates, currency and spelling in British formats on anything employees see.
Ask them to demonstrate a part-time employee's holiday entitlement calculation live. It is a small request that separates UK-built systems from translated ones very quickly.
5. Data protection is your responsibility, not theirs
HR systems hold some of the most sensitive data you will ever store: salaries, medical absence notes, disciplinary records, bank details. Under UK GDPR you remain the data controller and the supplier is your processor. Before you sign, get answers to:
- Where is the data hosted, and is it held in the UK or EU?
- Is there a written data processing agreement, and what does it cover?
- Can access be restricted by role, so managers see only their own team?
- Is there an audit trail showing who viewed or changed a record?
- What are the retention rules for leavers, and can they be configured?
- Is two-factor authentication available, and is it included in the price?
- What certifications do they hold — ISO 27001, Cyber Essentials or equivalent?
- If you leave, how do you get a complete export, in what format, and what is deleted?
If security is a wider concern across the business, our cyber security guide for small businesses covers the basics worth having in place alongside any new system.
6. Understand the real cost
Almost all UK HR software is priced per employee per month, which looks cheap on a demo and grows with your headcount. Build the total cost over the full contract term, including:
- The per-employee monthly fee, and any minimum number of employees you are billed for.
- Implementation, configuration and data migration fees.
- Training for administrators and managers.
- Each module you expect to add in the next two years, at today's quoted price.
- Support — is telephone support included or is it an upgrade?
- The annual price increase clause, which is often uncapped or index-linked.
- What happens to the price when your headcount falls as well as rises.
Twelve-month minimum terms with automatic renewal are the norm, so check the notice period and diarise it the day you sign. Our guide to comparing supplier quotes gives you a framework for putting these numbers side by side fairly.
7. Implementation is where most projects go wrong
Buying the system is the easy part. Before you commit, agree in writing who does what:
- Who cleans and uploads existing employee data, and in what format?
- How much of your time will it take, and over how many weeks?
- Is there a named implementation contact, or a generic inbox?
- How are employees introduced to it, and who trains the managers?
- What is the realistic go-live date, and does it clash with your payroll run or year end?
Insist on a free trial or sandbox with your own data before going live, and pick a go-live date that is not the week before Christmas or the end of the holiday year.
8. The questions to ask every HR software supplier
- What is the total cost over three years for my headcount, including setup and support?
- Which features are core and which are chargeable modules, and what do those cost?
- Show me a part-time employee's holiday entitlement being calculated.
- How does this connect to my payroll provider, and can I see it working?
- Who owns the data, where is it hosted, and how do I export all of it?
- Can I restrict manager access to their own team only?
- What is the minimum term, the notice period and the annual price increase?
- What does implementation involve and how much of my time will it take?
- Is telephone support included, and what are your response times?
- Can I speak to two current clients of a similar size in a similar sector?
Take the answers away and compare them in writing. A supplier that will not put pricing and support commitments in an email has told you what their contract will be like.
Next step
Work out your three real problems, decide how payroll fits, then shortlist no more than three suppliers. Browse providers in the HR software category, take our supplier vetting tick sheet into every demo, and read how to compare supplier quotes before you sign anything.