Developing a thriving enterprise presents a wealth of challenges, with various legal obligations dictating how you should run your business.

Every business owner must remain HR compliant, with any failure to observe your employees’ rights increasing the risk of a potentially crippling employment tribunal.

Employment law offers rich pickings for so-called ‘claim consultants’, who encourage individuals to lodge complaints and, if possible, take their former employers to a tribunal.

Firms specialising in workplace disputes have flooded the market over the past decade – a trend that has no doubt contributed to an 81% increase in tribunal claims over the same period.

With the number of employment tribunal claims reaching 191,541 in 2012/13, it seems ‘compensation culture’ has not only crossed the Atlantic, but has spread its wings from personal injury claims to employment-related matters.

The dangers to small business owners
Far too many UK employers are playing a dangerous game by failing to protect their business, leaving themselves exposed to time-consuming and costly legal action – as well as significant reputational damage.

Smaller businesses that don’t have the luxury of a dedicated HR expert are most exposed.

Indeed, in our experience there is a tendency amongst small and micro-businesses to adopt an informal approach to employee relations and workforce management – shunning rigid corporate procedures in favour or a more relaxed, family-style approach.

This informal approach is fine when things are going well, but a lack of HR policies and procedures will weaken your position significantly in the eyes of a tribunal judge should the worst happen.

Poor HR practices
It’s amazing to think that most small businesses have a fire insurance policy, yet statistically you are more likely to be sued by a disgruntled employee for unfair dismissal, discrimination or another employment law matter.

Too many employers complacently shrug their shoulders when it comes to the threat of tribunal claims, yet as workers become more savvy regarding their workplace rights, it’s never been more important to wise up.

Rather than burying your head in the sand it’s vital that, as an employer, you are pro-active and implement watertight policies.

Laying down and communicating clear rules on disciplinary and dismissal procedures, absences and sickness along with maternity and paternity leave, to name but a few, helps your employees know exactly where they stand and what is expected of them.

Unfortunately, there’s no one-size-fits-all answer when it comes to HR. A company’s unique circumstances must be taken into account when drafting policies and procedures, which is why it’s so vital that you enlist expert help.

The impact of tribunal fees
Whether it’s down to high unemployment or a greater awareness of their own rights amongst employees, there is plenty of anecdotal evidence to suggest that speculative and even malicious tribunal claims have become increasingly common in recent years.

Whatever you or a tribunal judge may think of the merits or otherwise of a claim brought against you, the financial consequences can be severe.

Take the recent example of a UK logistics firm, which found one of its employees to be committing expenses fraud, downloading adult content and going into business with a competitor.
Following his dismissal for gross misconduct, the individual took his ex-employer to a tribunal on the grounds of disability discrimination. Despite the judge ruling in favour of the logistics firm, the company still faced a £30,000 legal bill.

In an attempt to tackle mounting costs and abolish frivolous claims, the coalition government has recently introduced employment tribunal fees.

In order to lodge a claim, employees must now pay an up-front fee, the amount of which depends on the complexity of their case.

Despite the recent reforms, employers would be naive to think that frivolous claims will cease overnight – particularly with some ‘no-win-no-fee’ lawyers now offering to pay these initial fees.

Expert employment law advice for small businesses
Too many small business owners are stumbling blindly through the ever-changing and increasingly complex landscape of HR and employment law.

Without professional advice, you risk becoming just another tribunal statistic.

ClearSky HR, part of ClearSky Business, offers a range of legal compliance services tailored for small to medium-sized businesses.

As specialists in employment law and health and safety, their CIPD-qualified consultants offer expert HR advice and guidance on a fixed-fee basis with monthly rolling contracts and no minimum term.

To find out how ClearSky Business can help protect your business, call 0808 147 1921, email or visit today.

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About the Author

Alex McCann

Alex McCann runs Altrincham HQ - a Social Media Marketing company with 100+ recommendations on Linkedin and ranked Number 1 for Social Media Marketing in the UK on Freeindex

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