2004 was not a good year for the small employer. Problems from increased family leave may have made the headlines, but there were two other technical changes which will add to small business costs.
First, before 1 October 2004, the statement of initial employment particulars did not have to include or refer to grievance or disciplinary rules and procedures where there were fewer than 20 employees. If problems arose, then there was still a need to follow a fair procedure, but at least when taking someone on, this was part of the paperwork which could be left out.
Now even if you employ just one person, you need to include or cross-refer to both disciplinary rules and procedures.
To add to the threat, there is now a compulsory sanction for getting the paperwork wrong, but only if a claim (of any description) is made in the Employment Tribunal and upheld. The employee may be awarded a minimum of two weeks’ pay, capped at £280 per week, i.e. for most London full-time workers a payment of £560, but with the Tribunal having the power to increase the award up to 4 weeks’ pay (i.e. £1,120).
We have always recommended that small employers consider grievance and disciplinary rules and procedures, even if they were not "compulsory". The effect of the change is to make full documentation for the smaller employer even more desirable. One can try to simplify the rules and procedures, on the basis that exceptional cases are less likely to occur in a given small business. Even so, the cost per head of preparing documentation will be higher in the small business.
The second change affecting small employers relates to disability discrimination. The Disability Discrimination Act 1995 exempted businesses with less than 15 staff. This exemption was withdrawn on 1 October 2004.
The result is that small employers are now under a duty to make adjustments where current accommodation or working practices put a disabled person at a substantial disadvantage compared to a non disabled employee. This could extend to making adjustments to premises and re-allocating duties.
While adjustments are to be "reasonable" and one may have regard to financial and other resources, there is the risk that what a tribunal and what the Disability Rights Commission think reasonable and what you think is reasonable could be a long way apart.
The annual review of limits in connection with tribunal awards has now taken place, and is effective on 1 February 2005.
The maximum week’s pay for statutory redundancy calculation purposes goes up from £270 per week to £280, an increase of 3.7%.
The maximum redundancy payment or basic award for unfair dismissal rises as a consequence to £8,400. The limit on the compensatory award goes up from £55,000 to £56,800. The maximum award for Unfair Dismissal is therefore now £65,200.
Coming down to earth, however, the average award for unfair dismissal in 2003/2004 reported by the Employment Tribunal Service was £7,275.
The Pensions Regulator is continuing its crusade against employers who do not comply with their auto-enrolment duties. Those who think they are small enough not to feature on the Regulator’s radar would be well advised to think again.