SMEs penalised by workplace discrimination

Small businesses should brush up on their employment practices after latest figures show that nearly half of all cases of discrimination in the workplace are brought against firms employing less than 24 staff.

The statistics come from the most recent annual report published by the Department of Trade and Industry’s Workplace Employee Relations Survey. This also says that payouts at tribunals hit a record £3.5 million in 2000. The amount of claims has tripled since 1990 to more than 130,000 annually.

Reforms suggested in the Employment Bill, currently being scrutinised by a Commons Standing Committee, could help ease the problems SMEs face from vexatious employees, who feel they have a grievance against their company.

The Bill proposes to scrap the rules saying that only firms that employ more than 20 staff must have formal disciplinary and grievance procedures in place. The DTI says this should “help to avoid the need for litigation” by clearing up misunderstandings, even in the smallest companies.

In addition employees should raise concerns with their employer before applying to a tribunal. The DTI has set up an Employment Tribunal System Taskforce to consider the operational aspects of the current procedures as well as the impact of the possible changes.

This taskforce, which will consider the needs of small businesses in particular, is due to report back to the DTI shortly with recommendations. Individual views on the changes can still be put to the taskforce though.

Stephanie James, Employment specialist at the British Chambers of Commerce, believes “the new rules will help deter the rising number of ill-founded cases that are burdening enterprise and produce a fairer system for both employers and employees.”

At the moment 60% of smaller businesses are facing employment tribunal proceedings because they did not have an internal disciplinary or grievance procedure in place to prevent the disputes from getting to the tribunal stage in the first place.

Most tribunal cases leading to payouts are concerned with sexual discrimination. Julie Mellor, Chair of the Equal Opportunities Commission, broadly supports the proposal for smaller employers to have grievance procedures in place.

However she added that “in some cases it might be difficult for someone to use internal procedures because of the sensitivity of their complaint or the role of another person in the procedure”. Therefore Mellor still wanted employees to be allowed to go directly to tribunal and bypass internal procedures.

Most employers have welcomed all these proposals though. Jim Redman of the Forum of Private Business said the objectives behind the bill are fine if it is intended to reduce the costs to small business, particularly as regards employment tribunals. However, “the devil is in the detail,” he commented.

Redman wants to see how much the new legislation is actually going to cost small business, and whether it takes into account the informal relationships which exist in many small businesses, the so-called “small business ethos”, between employers and many contractors.

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