WHEN EMPLOYMENT LAW MEETS THE REALITY OF THE MICRO-BUSINESS

A recent Employment Tribunal case resulted in an award of more than £52,000 against a small employer. It highlights a much wider problem. Many micro and very small businesses have only the barest understanding of employment law, no internal HR function and may not be able to afford lawyers when things go seriously wrong. Yet, broadly, the same employment law applies whether an employer has five employees or 5,000.

Perhaps the cardinal mistake is then not to engage with the legal process. An employer may ignore ACAS Early Conciliation and, worse still, fail to submit a response to the Tribunal. In this case the employer did not present a response and was barred from participating on liability. Whatever the merits of a defence might otherwise have been, failing to engage can effectively remove the opportunity to put it.

Then there are the financial consequences. An award of £50,000 may be readily absorbed by a large organisation but could be existential for a micro-business. There is also the possibility of a costs application, particularly where the employer's conduct of the proceedings has itself been unreasonable.

None of this means that small employers should have fewer employment law obligations or that employees should receive less compensation. But there is an uncomfortable reality here. We impose an increasingly complex body of employment law on very small businesses which may have neither the knowledge nor resources to navigate it, and getting it badly wrong can ultimately threaten the survival of the business itself.