Just under a third of the claims ending up at an employment tribunal in the 2000/2001 financial year were issued against small businesses, says Brown, author of the Forum of Private Business’s Employment Manual, published in conjunction with The Advisory Partnership.

A little over a third of all businesses, large or small, taken to tribunal had a grievance or disciplinary procedure in place, and only half fought a successful defence of their cases.

When the Employment Bill 2001 becomes law this summer, employers will then have to operate legally a “minimum standard of grievance and disciplinary procedures,” warns Brown.

But Dave Harrop of the Forum of Private Business warns that employers must “tread very carefully and treat the procedure to the letter,” when dealing with problematic workers. “There are two main reasons for doing so: justice for the employee and to protect your own back,” he adds.

Harrop continues that the penalties for not doing so, can be heavy these days, adding that small businesses cannot afford to deal with them, as easily as bigger companies.

“No matter what the situation with an employee, the same kind of procedure must be followed every time,” advises Brown on implementing such procedures.

Firstly, carry out a proper investigation. Make sure you have the right person, and that they are not being forced to do anything dishonest by someone else. Take witness statements.

Then, consider whether you have reasonable grounds to take action against a problematic employee. If so, you must follow a certain procedure:

1. Write to the employee, summoning them to a disciplinary hearing, giving date, time and place, to deal with any allegations
2. Inform the employee they have the right to be accompanied by a fellow employee or a trade union official
3. Allow the employee access to any written statements to allow them to prepare for the hearing
4. At the hearing, take notes, and put the facts before the employee
5. Give them the opportunity to state their case
6. Adjourn the hearing to give due consideration to the employee’s statement
7. Make a decision
8. Communicate the decision to the employee

The penalty, says Brown, should be proportionate with the offence and with similar, previous offences, if any. An employee who has only worked there for five minutes, but has committed the same offence, should be given the same penalty as one who has worked there for three years.

After awarding the penalty, the employee must be given the right to appeal, preferably to a different individual in the firm, although this is not always possible in very small businesses.

Brown emphasises that notes should be taken at all the stages.

Of course one of the best ways of dealing with problematic employees is by avoiding the problem in the first place. Experts advise that taking up references is one of the best ways of doing this. Murray Fairclough of Abbey Legal Protection says “I am amazed how many people don’t ask simple questions about the employee ’s past.”