Disciplinary and Grievance Procedures in Small Businesses

By Carmen Neagu, 20 January 2026

In many small businesses, disciplinary and grievance procedures only come into focus when something already feels uncomfortable.

A concern is raised, a relationship becomes strained, or a performance issue stops being a quiet frustration and starts affecting others. At that point, business owners often realise they are expected to follow a formal process they have never had to think about before, and uncertainty quickly sets in around what is required, what is optional, and what might expose the business to risk.

What often surprises small employers is that disciplinary and grievance procedures are not reserved for larger organisations with HR teams and layered management structures. The ACAS Code of Practice applies to all employers, regardless of size, and while it allows flexibility in how procedures are applied, it does not remove the expectation that issues are handled fairly, reasonably and with transparency.

In practice, this does not mean small businesses need lengthy handbooks or complex policies. What it does mean is that there must be a clear, understood process that can be followed consistently when something goes wrong.

What a simple disciplinary and grievance policy looks like in a small business

A proportionate policy for a small organisation does not need to be complicated, but it does need to cover a few essential areas clearly and in writing.

It should explain how employees can raise concerns or grievances, who they should raise them with, and what steps the business will follow once an issue is raised. It should outline how disciplinary matters are handled, including investigation, meetings, potential outcomes and the right to appeal. It should also make clear that informal resolution will be considered first where appropriate, but that formal procedures will be followed when issues are serious or unresolved.

Crucially, the policy should state that the business follows the ACAS Code of Practice as a minimum standard. ACAS does have resources and templates available for all employers and employees; templates on all things relating to disciplinaries and grievances are available here: https://www.acas.org.uk/discipline-and-grievance

For small businesses, the value of a policy is not in legal language but in clarity. When people know what will happen next, situations tend to feel less personal and less adversarial, even when the issues themselves are difficult.

A realistic example of how a grievance might be handled in a small business

To understand how this works in practice, it helps to walk through a simple example.

An employee raises a concern with their line manager about how they are being treated at work. Initially, the manager listens and attempts to resolve the issue informally through conversation. If the employee feels this has not resolved the problem, or if the issue is serious, they submit a formal grievance in writing.

Once the grievance is received, the employer acknowledges it promptly and confirms who will handle the process. In a small business, this may be the owner or another manager, depending on who is involved. A meeting is then arranged without unreasonable delay, allowing the employee time to prepare and reminding them of their right to be accompanied by a colleague or trade union representative.

Before or after the meeting, the employer investigates the concern by gathering relevant information, which might include speaking to others involved, reviewing emails or records, or clarifying timelines. The purpose of the investigation is not to prove someone wrong, but to understand what has happened sufficiently to make a fair decision.

Following the meeting and investigation, the employer confirms the outcome in writing, explaining the decision, any actions to be taken, and offering the right of appeal. If the grievance is upheld and relates to another employee’s behaviour, this may then trigger a separate disciplinary process.

Even in very small teams, this structured approach creates distance between the issue and the individuals involved, which often helps preserve working relationships.

How a disciplinary issue might be managed proportionately

A disciplinary process follows a similar rhythm.

A concern about conduct or performance is identified, and the employer investigates before taking any formal action. The employee is informed of the issue in writing and invited to a meeting where they can respond. The meeting is held fairly, the employee is allowed to be accompanied, and a decision is made only after considering all the information available.

Outcomes are confirmed in writing, and the employee is given the right to appeal.

In small businesses, it is common for the same person to manage multiple stages of the process. ACAS recognises this reality and what matters is not separation of roles at all costs, but evidence that the employer acted reasonably, listened properly, and did not rush to judgement.

Why this matters more than many small businesses realise

Employment tribunals rarely focus solely on whether an employer had a good reason to act. Much more attention is paid to how decisions were made and whether the ACAS Code was followed in principle.

Where employers fail to follow fair procedures, tribunals can increase compensation by up to 25 per cent. But beyond legal risk, unclear or inconsistent handling of disciplinaries and grievances damages trust, morale and confidence within small teams very quickly.

For most small businesses, the aim is not to become more corporate, but to remain human while still being fair. Clear, proportionate processes support that aim rather than undermine it.

Final thought

You do not need to wait for a serious issue to arise before thinking about disciplinary and grievance processes. In fact, the best time to clarify them is when you are not under pressure to act quickly.

A simple, well-understood approach gives small business owners confidence to manage difficult situations properly, and gives employees reassurance that concerns will be handled fairly.