January 18, 2022

small business

Outsourcing your business HR function provides your business with insurance should you face any employee issues.

The case below highlights why all businesses should have HR support to ensure that they meet their legal requirements as employers.


A small business (A) faced a claim at an employment tribunal for constructive unfair dismissal, breach of contract and illegal deduction from pay.  They had no internal HR support, contracts of employment or employment policies in place.  They had a number of employees, 12 in total.  They had 3 fulltime, 3 part-time and 6 zero hours employees.

They supplied their services as a third party relying on the third party to provide work as and when required.  They used the zero-hour contract people to meet this requirement.

The employee B who raised the case claimed that he was told when he started that he was to be paid £15.00 per hour when he joined the company.  He was never provided with a Statement of Main Terms.  He worked for a number of months working more than 30 hours per week.  After around 5 months the third party cut the hours they required from A, who then advised B that they had no work for him.  B asked to take holidays and was told he was not entitled to any holidays as he was on a zero-hour contract.

B challenged this and was when told that he was on a zero-hour contract, he stated that he had been told he was on a 30-hour contract being paid £15.00 per hour.  A disputed this and stated that B had been informed when he started that he was on a zero-hour contract at £10.00 per hour.  B claimed that he had been told this by the manager he dealt with from the third party.  B never challenged the rate of pay during the period he worked more than 30 hours per week as he did not want to rock the boat.

B raised a grievance over this.  A failed to follow any fair Grievance procedure, therefore B resigned.


B won his claims at the tribunal.  A was ordered to pay £7,000 as compensation to B.  It was highlighted that A had failed to provide a Statement of Main Terms nor have any compliant policies in place.  They had also breached B’s statutory right to raise a grievance by failing to follow any meaningful process.  They had also failed to pay holiday pay.


A could have looked to outsource their HR function.  LBJ Consultants could have provided this for less than £100* per month which would have included providing all necessary employment policies along with Statements of Main Terms.  Alternatively, we could have provided these documents on our Pay as You Go service that would have cost A £500*. 

By failing to have any HR process in place A has suffered -

  • A large financial cost.
  • The cost of time dealing with the Tribunal process.
  • Extreme stress by A’s management during the Tribunal process.
  • The damage to A’s reputation.

Having HR support leads to piece of mind, businesses have the comfort of knowing that they have expert advice as and when they need it, As can be seen from this example A has suffered the loss of £7,000 with this award: when the cost of taking on our Basic Hr Service would have been £1,200 per year, or £500 to provide the basic documentation required by law.

Don’t let your business fall into this trap.  Outsourcing your HR function provides your business with insurance should you face any employee issues.

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