Small businesses unprepared for new employment laws

• 40 per cent of small business employers believe they will face some kind of employment dispute in the next two years
• 48 per cent of small companies do not have an HR policy covering dismissal procedures

Business owners believe they will face an increasing number of employment disputes yet many have done very little to ensure that they are protected from claims of unfair dismissal, which could be set to increase as employers fall foul of statutory procedures that came into effect on October 1 st.* Research from the accountants and business advisers MacIntyre Hudson found that 40 per cent of business owners believe that they will face an employment dispute in the next two years, yet nearly half (48 per cent) admit to not having a written HR policy that covers procedures for tackling poor performance and dismissal. Rakesh Shaunak, principal at MacIntyre Hudson commented: “Business owners are concerned that they become the victims of the so-called ‘compensation culture’ as less scrupulous employees try to bring about grievances which are unjustified or are aimed at manipulating the employment procedure. “Whether or not this feeling is justified, directors are going to have to come to terms with the new statutory requirements relating to disciplinary procedures. If the employer can’t demonstrate that he has followed the minimum statutory steps, then he will be found guilty of unfair dismissal if the case reaches an Employment Tribunal and could be liable to pay up to 50% more than the original damages.” And it seems that small business directors are unaware of just how costly the Employment Tribunal can be. 64 per cent were unaware that they can not recover the legal costs for an unfair dismissal brought to an Employment Tribunal – win or lose – and 57 per cent didn’t know that a business can be liable to pay up to £55,000 in damages for unfair dismissal. Rakesh Shaunak says: “Even a small percentage of this cost could be incredibly damaging to a smaller company. This really is a warning to companies of all sizes that they need to get their procedures for dealing with under-performing employees watertight to ensure adequate protection of both employer and employee.”