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New Research on Small Firms and Employment Tribunal Cases

It is well-known that small firms are more likely to face Employment Tribunal (ET) claims than large ones, and raw figures suggest that they tend to lose cases that reach tribunals. New research from Warwick Business School shows that small firms are not in fact disadvantaged if they follow appropriate disciplinary procedures.

The researchers found that a key influence on success at a tribunal was having procedures in place and actually using them. Simply having procedures, or an HR department, made no difference in itself. Small firms are the least likely to have and to follow procedures, and it is this fact, and not the size of the firm as such which is key. An absence of procedures means that problems are not resolved within the firm, and that a claim to an ET may be an employee's only recourse.

Commentators also suggest that the small firm is disadvantaged as cases proceed through the 'pipeline' from claim to tribunal. The research found no evidence of this. Dropping out of the pipeline at various stages was not related to the size of the firm.

Professor Paul Edwards of Warwick Business School's Industrial Relations Research Unit says, 'small firms have the benefit of being able to handle employment relations issues informally, but informality can be an excuse for a lack of professionalism. Formal procedures do not need to be complex or bureaucratic, but they must be consistent and fair. Proper procedures help to avoid ET cases'.

The research is based on statistical analysis of the 2003 Survey of Employment Tribunal Applications, which provides a representative sample of ET cases.

For further information please contact:

Vin Hammersley, Director of Communications, WBS
office 024 7652 4124
mobile 079 8595 6624

3rd July 2006