The impact of employment regulation on the employment relationship in SMEs

Reports findings from an empirical investigation into the nature of the employment relationship in small to medium‐sized enterprises (SMEs) and how this is affected by the Employment Relations Act (1999). A two‐stage methodology was used, with a postal questionnaire of 69 companies and telephone interviews with a further 33 SMEs. The informal, paternalistic approach to employee relations in many small companies was found to be largely still intact. The government's intention of developing partnerships in the employment relationship in order to promote greater fairness in the workplace has, to a significant extent, failed. Small companies may not be granting their employees all their statutory rights. Whether this is ignorance or a deliberate strategy is unclear, but the incidence of employment tribunal cases may continue to increase for small and medium‐sized companies if they ignore the current employment legislation.