Small Businesses Lacking Basic Employment Knowledge

Small businesses looking to stay within the law and save money are today being advised to go back to basics and address their fundamental employment practices, especially when it comes to the hiring and firing of staff.

The advice, from UK experts in workplace issues Croner, reveals that, based on evidence of calls to its Business Support Helpline, too many small employers are unaware of basic employment principles. Failing to follow the correct procedures for employee misconduct, minimum pay and even basic employment contracts, is putting employers at risk of potentially costly claims.

Croner is highlighting the five most common ëmanagement mythsí which could catch out unaware employers.

1. ìSmaller firms are exempt from paying staff the national minimum wage.î

HM Revenue and Customs recently reported this as one of the top excuses of companies not paying the minimum wage. However, the national minimum wage must be paid to all employees, regardless of the size of the company. Enforcement teams are in place to identify companies not meeting these regulations.

2. ìA monthly paid employee’s period of notice is one month.î

This is a widely held misconception. The minimum legal notice period after one month is one week per year of service, to a maximum of twelve weeks. This is irrespective of how frequently someone is paid, but could be longer for more senior staff.

3. ìThere is no contract of employment as there is nothing in writing.î

A contract does not have to be written down and can take the form of a verbal agreement, after which the employer is legally required to honour certain employment rights.

4. ìAn employer can sack someone on the spot without following any form of procedure providing the employee is guilty of gross misconduct.î

This is highly risky, leaving the employer open to an unfair dismissal claim. Workers should be given an opportunity to explain themselves at a properly conducted meeting before decisions are made.

5. ìAn employee with less than one year’s service can be dismissed for any reason.î

It is true that an employee with less than a yearís service has fewer employment rights than someone who has a yearís service or more. However, there are over 20 grounds where an unfair dismissal complaint can come from an employee with under one yearís service.

Alan Phillips, employment manager of the Business Support Helpline at Croner, says: ìThe ëManagement mythsí we have identified are commonplace in business practice, but in actual fact are little more than old wivesí tales. While many small business owners often remark on the cost and time involved in complying with complicated ëred tapeí, itís actually the most basic employment principles that are tripping them up.

ìHowever, most employers are unlikely to flout the law deliberately, and many are probably unaware of the error of their ways. That is why weíre advising them to consider their employment practices now, rather than make mistakes that could cost them dearly later.î

Employers unsure about any aspect of employment law are advised to seek professional advice.