Warning to employers

[Clitheroekid]

These days, employing people is an absurdly hazardous business, particularly for the owners of small businesses who have nowhere near the range of legal knowledge that the law expects them to have, and don't have sackfuls of cash to pay for external advisers.

Small businesses are subject to so many laws that falling foul of them is almost inevitable, but they are treated just the same as a FTSE plc, and inadvertent breaches of the law can have severely expensive consequences.

This article caught my eye recently, and perfectly illustrates the point - https://www.dacbeachcroft.com/en/gb/art ... -interest/

In summary, the claimant went to work for a very small charity run by a management committee and with a group of eight volunteers. She was employed as a caseworker, helping those affected by domestic violence, female genital mutilation or HIV.

She was taken on for a 3 month probationary period, but performance concerns were raised, which led to her probation being extended for 3 months. This was confirmed in writing to the claimant. In response, she wrote to the charity, raising a number of concerns, including that:

- she had not received an employment contract;
- she had no internet access for the first 6 weeks of her employment;
- the charity had not provided her with her own mobile phone; and
- the charity didn't securely store information about its clients, which she said was not compliant with data protection legislation.

Following receipt of this letter, the charity dismissed her, confirming performance grounds as the reason. Normally, an employee has to be employed for two years before they can claim unfair dismissal, but this time limit doesn't apply in cases of `automatically unfair' dismissal, such as trade union activities and discrimination.

She therefore brought employment claims against them, alleging that she was unfairly dismissed for having made `protected disclosures' - what's generally known as `whistle blowing' (another `automatic' ground).

The claim went to an Employment Tribunal, which culminated in a four day hearing. She lost, on the basis that the so called protected disclosures were just a smokescreen, and a way of getting what was really just a claim for her own benefit round the normal two year employment requirement.

The charity no doubt heaved a sigh of relief. But if they did, it was premature, as she then appealed to the Employment Appeal Tribunal. They allowed her appeal on fairly legalistic grounds - that even if her prime motive was self-interest the test was not whether or not the PD's were PD's, but whether she reasonably believed that they were.

So the EAT sent the case back to the ET, and told them to try again. So far as I know the hearing’s not yet taken place, and it may well be that the charity will just feel forced to settle her claim with a payoff, rather than exhaust their budget in legal fees.

Whilst on my own reading of the judgment (for insomniacs it's here - https://www.bailii.org/uk/cases/UKEAT/2 ... 9_2406.pdf) - she was just a PITA from the start, and it's entirely understandable why she was sacked, it's really the principle that concerns me. It's just wholly unreasonable to expect small employers to be able to be aware of, still less deal effectively with such obscure legal points.

This is particularly the case when the financial consequences of getting it wrong can be so serious. Not only are they faced with potentially tens of thousands in legal costs, but the compensation payable can also be high. The very lowest guidelines recommend a band of £900 to £8,600; the middle band is £8,600 – £25,700; and there’s no upper limit.

For a small business such sums can easily be enough to put them out of business. I've no problem at all with truly bad employers going out of business, but the vast majority of small businesses end up in this situation not because they're evil, or ruthless exploiters of the downtrodden – they end up there through ignorance.

Of course, we all know that ignorance of the law is no excuse. But that maxim originated at a time when the law was relatively simple, and had very little impact on small businesses. These days, such is the burden of legislation that it's completely impossible for the average owner of a small business to keep up to date with not just employment law, but consumer rights, data protection, health and safety, tax law, insurance requirements, landlord and tenant law, etc, etc.

The problem is that in themselves most of these laws are well-intentioned and offer genuine protection, so it's not feasible just to say that small businesses can be exempted from them.

I don't have an easy solution, but I do know that the present system is grossly unfair, and imposes quite unreasonable burdens on people who can least afford them. It seems to me that as it’s the Government who has created this situation they have an obligation to provide free, high quality advice – which obligation is emphatically not discharged by the information available on the Government websites.

But I’m not holding my breath!

[Alaric]

Small businesses are subject to so many laws that falling foul of them is almost inevitable, but they are treated just the same as a FTSE plc, and inadvertent breaches of the law can have severely expensive consequences.

Which recent government would you suggest is most responsible for this state of affairs? Or is it all of them, being unable to resist Civil Service advocacy or pressure groups?

[AF62]

Small businesses are subject to so many laws that falling foul of them is almost inevitable, but they are treated just the same as a FTSE plc, and inadvertent breaches of the law can have severely expensive consequences.

All very reasonable points, but why should an employee of a small company have less protection than an employee of a FTSE plc.

If the law is poor then get rid of it altogether, but not just because it is a bit troublesome or expensive.

[Lanark]

the middle band is £8,600 – £25,700; and there’s no upper limit.

If a business can't afford £25K then you cant afford to employ someone in the first place.

If regulations like this force companies to start taking data protection seriously then it is working as intended.
If it discourages incompetent companies from expanding their operation, then it is working as intended.

I really don't see the problem here, if a company was leaving stacks of £20 notes lying around, you wouldnt have much sympathy if a bunch of them went missing. Having lax data security these days is much the same thing.

Back in the 1990's everyone took a more relaxed attitude to this stuff, but times have changed, there are high school kids who can (and will) break into insecure systems.

[Clitheroekid]

If a business can't afford £25K then you cant afford to employ someone in the first place.

You appear to have little understanding of the economics of a lot of small businesses. There are thousands of very small businesses, such as cafes and hairdressers, that may only have one employee to help out.

These businesses are often run by people more for reasons of personal enjoyment than profit, but they provide very useful services to the local community as well as employment opportunities that would not otherwise exist. There are also many small charities, like the one in this case, that do a great job with very few resources.

But I know from having dealt with many such businesses over the years that they often make minimal profits and are run on a shoestring. A sum like £25,000 (and that could be doubled with legal costs) would often be more than the annual turnover, and in the case of a small business could represent several years' profits. The need to find such a sum would therefore wipe out many such businesses.

Are you therefore suggesting that anybody who couldn't afford to write out a cheque for £25k or £50k for a completely unbudgeted expense should not take on an employee at all? If so, there would be a hell of a lot of businesses - and jobs - that would suddenly disappear.

[stewamax]

If a business can't afford £25K then you cant afford to employ someone in the first place.

Owners of very small businesses would laugh at this egregious Planet Zog comment - if it were at all funny.

[Lanark]

I think you will find that any fines for this kind of thing will be proportionate to the size of the business. Bankrupting the business would be counter productive - they would probably get nothing.

[johnhemming]

Generally this is employment tribunal stuff where the award is not as far as I know affected particularly by the size of the company and the legal costs are not necessarily so affected either.

GDPR fines can be linked to the size of the company.

[gryffron]

I think you will find that any fines for this kind of thing will be proportionate to the size of the business. Bankrupting the business would be counter productive - they would probably get nothing.

True for incorporated businesses. But sole traders, who are the vast majority of small traders, are personally liable. So, take on an employee, and lose your house!

Gryff

[AndyPandy]

If a business can't afford £25K then you cant afford to employ someone in the first place.

Really???

The reason for taking someone on is so that they help to bring in additional income - ideally the cost of their employment is more than offset by income generated (even if indirectly by freeing up the owner to pursue revenue streams). In addition, even if it takes a while to get up to speed, the salary is paid in weekly or monthly lumps, not a year up front.

We don't have the wherewithal to write a cheque for £25K but would consider additional staff if there was a Business case for it.

The £25K would be a direct and immediate hit to the bottom line with no benefit whatsoever.

[supremetwo]

https://www.dailymail.co.uk/news/articl ... laims.html

£200,000 claim.

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The 28-year-old claims she was pushed too hard to carry out repetitive tasks
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[fca2019]

Hi, from my experience employers can often avoid the risk by taking pretty basic steps, such as giving a contract of employment to all employees, having a probationary period written in, including option to extend that period.

This gets over most problem employees as can be released during/after the probationary period.

Also when things get wrong having face to face discussions with the employee and trying to agree together what to do.

Some companies go for the macho sacking, and getting frog marched off the premises, followed by the inevitable dispute, legal fees and unfair dismissal settlement, which is an expensive way of doing it.

I've know situations being solved simply by asking the employee if they want to go and pay them a months notice and a difficult employee walk out the door, problem solved with little cost.

So I think often employers/companies bring it on themselves by not following basic rules, which comes down to mismanagement.

[Charlottesquare]

Hi, from my experience employers can often avoid the risk by taking pretty basic steps, such as giving a contract of employment to all employees, having a probationary period written in, including option to extend that period.

This gets over most problem employees as can be released during/after the probationary period.

Also when things get wrong having face to face discussions with the employee and trying to agree together what to do.

Some companies go for the macho sacking, and getting frog marched off the premises, followed by the inevitable dispute, legal fees and unfair dismissal settlement, which is an expensive way of doing it.

I've know situations being solved simply by asking the employee if they want to go and pay them a months notice and a difficult employee walk out the door, problem solved with little cost.

So I think often employers/companies bring it on themselves by not following basic rules, which comes down to mismanagement.

The asking employees if they want to go route needs dealt with only after taking legal or HR advice, imho. Protected conversations need properly managed and the employer has to fully understand what may be freely said and what is dangerous to say even within such a conversation, a unaware employer blundering through one of these without guidance is not a clever idea, even those versed in them can and do make stupid mistakes which can bite.

see this guidance as a start

https://www.ibblaw.co.uk/insights/blog/ ... versations