News

October 21, 2011

Three-quarters of small firms dismissing staff unfairly

Three-quarters of small businesses have admitted to dismissing an employee unfairly, research by business advisory firm Peninsula has highlighted.

In the survey of 2,167 small firms, 73 per cent confessed they fired a member of staff without following the correct procedure, with most citing poor performance as the main reason for the dismissal.

Employers who sacked staff in this way were facing a legal time bomb, according to Peninsula chief executive Peter Done.

“[Employees are] more knowledgeable about employment rights than ever before,” he said. “At some stage an employee will take you to employment tribunal and if you have dismissed unfairly then there is a good chance that you will lose.”

Peninsula employment advice director Alan Price said that many small-business owners were ignorant of the law, or did not take the risks of being taken to court seriously.

“In the current economic climate, employers are simply choosing to take the chance that they won’t be taken to a tribunal for unfair dismissal,” he said. “Unfair dismissal awards are capped at £68,000, but if there’s any taint of discrimination, the award could be unlimited.”

Where staff had been employed for more than one year, it was vital for employers to follow certain steps to avoid unfair dismissal claims, Price added. Employers should also record conversations and discussions in case evidence was later required in court.

“In cases involving misconduct, for instance, you must issue at least one warning and discuss the situation with the employee before lawfully dismissing somebody,” he said.

“If you’re making somebody redundant, you must show you’ve considered alternatives, such as reducing the person’s hours, as well as held meetings to set out your reasons for dismissal.”

The exception was gross misconduct – such as theft or assault – which Price said “effectively shattered” an employment contract.

Sara Lee, spokeswoman for the Federation of Small Businesses, said it was inevitable that some firms would fall foul of the law.

“Employment law is incredibly complicated for small firms,” she said, adding that few businesses had the resources to keep up with “constant legal changes”

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