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Small comfort? Limited resources as a defence in employment disputes

Christopher Saunders - DAS Law

  1. 28 January 2015
  2. Business
  3. 0 comments
Literally small businessman challenging an industry titan

Many owners of small businesses have a tendency to ignore the ‘red tape’ of employment law, thinking that it is too much of a burden to bother with or even that it doesn’t apply to them. While there is a kernel of truth to this, employers running small businesses disregard the rules at their peril.

It’s a common misconception that the smaller employer has complete immunity to act in any way that they deem appropriate, regardless of the hardship this may place on the workforce, due to the belief that they can rely on their ‘limited resources’ and ‘size’ as a defence.

Unfortunately for the business in question, and much to the satisfaction of any justly aggrieved worker, any attempt to use this kind of blanket approach as a shield to hide behind will carry very little weight with a tribunal judge.

Despite this, however, an employer with limited resources will have greater flexibility and room for manoeuvre compared to a larger commercial enterprise with a wealth of resources available to it. For example, specifically in connection with a case for unfair dismissal, section 98(4) (a) of the Employment Rights Act 1996 makes it very clear that the determination of the question “Is the dismissal fair?” will “depend on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably.. in dismissing the employee”. This means that a tribunal judge will certainly take into consideration the size and available resources of an organisation when making a decision on whether or not a fair dismissal procedure was followed.

Adding to this, while all employers, regardless of their size, have an obligation to follow the ACAS Code of Practice on disciplinary and grievance procedures, Paragraph 3 of the code makes it clear that “employment tribunals will take the size and resources of an employer into account when deciding on relevant cases and it may sometimes not be practicable for all employers to take all of the steps set out in this Code”.

On balance, we here at Law on the Web believe that the law in this area makes a lot of sense. Smaller employers are given more leeway when it comes to these issues if limited resources place restrictions on the administrative burden they can shoulder; however, the law in this area should be treated with caution, and smaller employers should not point to these provisions as a carte blanche to impose changes or act in a way which is simply unfair.

As with all cases in the field of employment law, specialist advice should be sought from an employment lawyer in order to analyse the riskiness of any proposed course of action.

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