Whether it’s a free car or a free side of french fries, we always wonder: “What’s the catch?” That same skepticism should be applied to the many free HR software systems available on the market today.
We get why these products are an attractive prospect, especially for small businesses. Who wouldn’t want software that doesn’t cost a penny?
Free HR software systems have significant issues and limitations rolled up into that attractive price tag. If small businesses don’t carefully consider these issues when comparing options, they’ll end up having to upgrade to a paid version of their system or replace it entirely within 1-2 years.
With that in mind, let’s take a look at 10 popular free HR software systems and answer the all-important question: What’s the catch?
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Quick summary: Bitrix24 is a cloud-based collaboration suite with more than 35 separate tools for small businesses in the areas of HR, project management, business telephony and customer relationship management.
The HR offering is fairly robust for a free platform. Functionality includes an employee directory and company org chart, document management and an intranet to support collaboration, to name a few. Bitrix24 even boasts features like appreciation badges and pulse surveys to help companies boost employee engagement.
What’s the catch? The free version of Bitrix24 only supports 12 users and 5 gigabytes of online storage—numbers you could outgrow quickly, or may have outgrown already. Beyond 12 users—which really means 12 employees, because of Bitrix24’s employee self-service capabilities—you need to upgrade to a paid version.
Also, if you were hoping to manage employee absences or brand the system with your company logo, those features aren’t included in the free plan. Lastly, the free plan doesn’t include customer support, which could be a significant headache if you run into problems.
Quick summary: Created in 2016, Factorial is a relative newcomer to the free HR software space. The system includes a shared calendar, company org chart, document management, payroll management and an employee portal where workers can perform tasks like request PTO or check their latest pay stub.
Factorial also includes benefits administration functionality. This helps small businesses enroll their workers in insurance plans and manage perks like meal vouchers, commuter stipends and employee wellness allowances for things like gym memberships.
What’s the catch? Because Factorial is based in Barcelona, functionality for payroll and benefits administration is only available to companies in Spain for the time-being, which could be a deal-breaker for U.S. businesses.
Quick summary: HR.my is a cloud-based platform that supports a number of basic HR needs, including personnel tracking, payroll processing, time and attendance and employee knowledge management. A browser-based time clock is included, as is a company-wide notice board where executives and other leadership can post important announcements.
HR.my supports an unlimited number of employees, and the vendor (Chrysanth Software) is consistently adding updates and improvements based on user feedback.
What’s the catch? What you see is what you get with HR.my, which is pretty barebones. Payroll functionality is especially limited, due to Chrysanth Software being based in Malaysia and HR.my’s user interface is also pretty dated compared to most modern systems.
Quick summary: Businesses can use IceHrm for free in two ways: IceHrm Open Source or IceHrm Cloud. With IceHrm Open Source, users can manage employee profiles, run payroll reports, monitor attendance and track the time that workers spend on various projects. There’s even a travel management module for managing employee travel budgets.
IceHrm Cloud is more robust—adding functionality for things like PTO management, expense management, employee training and recruiting—but is only free for up to five employees.
What’s the catch? If you have more than five workers, IceHrm Cloud is out of the running, which means many small businesses looking for free software will be opting for IceHrm Open Source. With any open source platform, you’ll need to maintain your own servers, which comes with its own inherent cost.
IceHrm Open Source is also missing some pretty critical functions. There’s no audit trails or document management, and you can’t create custom HR forms. Support options for IceHrm Open Source are pretty limited as well. You’ll likely have to use IceHRM’s GitHub community for troubleshooting, and you may not find the answers you need.
Quick summary: Alongside OrangeHRM’s paid options (OrangeHRM Professional and ORangeHRM Enterprise), the vendor also offers OrangeHRM Open Source: a free version to support small business core HR needs.
With OrangeHRM Open Source, users can manage an employee database, track time and attendance, post job openings to your company’s careers page, administer performance reviews and more.
OrangeHRM is one of the most widely used free options, with over 3.5 million users worldwide.
What’s the catch? With any open source software, you need to implement and maintain your own servers. That’s not free. With OrangeHRM Open Source specifically, neither are things like customer support, bug fixes and security updates, which carry an extra cost.
OrangeHRM Open Source’s functionality also has some significant limitations. For example, you can create employee profiles using preset fields, but you can’t track job and salary history. You also can’t customize workflows or keep an audit trail on system changes.
6. Rise Lite
Quick summary: Rise, a paid platform that helps small businesses manage their core HR needs, also offers Rise Lite, which is a free payroll software system that’s available for any Canadian business with 20 employees or less.
With Rise Lite, you can run payroll as many times as needed, including off-cycle payments. Users can create formulas to calculate things like commissions, deductions and bonuses, and the platform offers the flexibility to create customized payroll reports.
What’s the catch? Twenty employees is a pretty high limit for a free HR system, which is great, but if you have more than 20 workers, or you don’t operate in Canada, Rise Lite isn’t an option for you.
Quick summary: Sentrifugo is another free open source option that offers a ton of functionality: personnel tracking, time and attendance, recruiting, asset and expense management, performance appraisals, background checks and employee offboarding, just to name a few. It’s one of the more robust options in the free HR software space.
One unique feature that Sentrifugo offers that you won’t find in many free solutions is the ability to manage disciplinary incidents with employees. Users can record statements from relevant parties, make verdicts and track what corrective actions took place.
What’s the catch? Similar to other open source options, Sentrifugo isn’t truly “free” since you have to maintain your own servers, which has its own cost. But if you have the IT capacity to support it, you’re good to go. Sentrifugo has no hidden fees or limitations.
Quick summary: Touted as “social HR software,” WebHR is a cloud-based HR suite that can handle all of your core HR needs, including personnel tracking, payroll, recruiting and time and attendance. Report generation is included, as are dedicated mobile apps for Android and iOS devices so employees can access WebHR on the go.
Where the “social” aspect comes into play is through WebHR’s built-in messenger (for individuals or groups), discussion forum and functionality for employees to post status updates to share what’s on their mind.
What’s the catch? WebHR is only free for up to five employees, making it a viable option only for startups and extremely small companies (after five employees, a monthly fee kicks in). With the free version, you’re also limited to three departments, a set number of attendance entries, and you can’t upload documents or create custom fields.
9. Zenefits Lite HR
Quick summary: The main Zenefits platform may have gone paid, but the vendor hasn’t abandoned free offerings altogether thanks to Zenefits Lite HR. This is a stripped down, free version of Zenefits that offers onboarding, offboarding and personnel management. With the Lite plan, you can also integrate Zenefits with other systems you already have in-house.
What’s the catch? You can add time and attendance and limited benefits administration functionality to the Lite plan, but each come at a cost. Any other functionality for things like payroll, compliance management or performance appraisals requires upgrading to the Standard ($5/employee/month) or Advanced plan ($9/employee/month) options.
10. Zoho People
Quick summary: Yes, even big vendors like Zoho are in the free HR software market. Along with the vendor’s paid options, Zoho People offers a free version where users can manage employee information and documents, track absences and run reports.
Like WebHR, Zoho People also features dedicated mobile apps for Android and iOS devices.
What’s the catch? Zoho People is only free for up to five users and only offers 250 megabytes of storage, which are both pretty paltry numbers. In other words, the free version of Zoho People is essentially meant to be a trial before upgrading to one of the vendor’s paid versions.
Conclusion: Free Isn’t Always Free
It’s clear looking at just these 10 options that free doesn’t always mean free. And when it does, you get what you pay for—next to nothing. Here’s a recap of some of the common constraints with free HR software that small businesses should be aware of when comparing options:
- Limits on the number of employees or users. If you’re not hiring for the foreseeable future, this may not be a deal-breaker. But if you’re growing quickly, you may reach these limits sooner rather than later, meaning you’ll have to upgrade or find a new solution.
- Limits on functionality. Most free systems are either pretty limited from the get-go, or hamper robust functions with significant shackles (e.g., no ability to customize fields or track changes). That could lead to user frustration or requiring purchase of another system to make up for the setbacks.
- No customer support or updates. With some free systems, you’re truly on your own. If you run into problems, you could spend days trying to find a fix. Meanwhile, while paid customers get important security updates, you may be left leaving sensitive employee information vulnerable.
- Open source isn’t truly free. While it’s true you can download open source software absolutely free, that doesn’t consider the fact that you need to have up-and-running servers and IT staff on hand to implement it. That’s not free at all.
It may hurt the budget initially, but in almost all instances paid HR software is a better option to get access to robust functionality that your company won’t outgrow quickly. To discover affordable systems that fit your needs, head to our HR software page.
You can also call us at (855) 998-8505. We’ll connect you with an experienced HR software advisor who will take your budget, functionality needs, company size and more into consideration to give you a shortlist of recommended products. Oh, and we’ll do it for free—no catch on this one.