How to handle a grievance as a small business (UK)

An employee has just put in a grievance.

You're now staring at an email that uses words like "bullying", "harassment" or "unfair treatment" — and the ACAS Code of Practice is suddenly your new bedtime reading.

The stakes are higher than they look: if you mishandle a grievance, any later tribunal can uplift compensation by up to 25% for failing to follow the ACAS Code.

The good news is that even small employers can run a fair, defensible grievance process without drowning in bureaucracy.

First question — can you resolve this informally?

Not every complaint needs a full formal grievance process.

Sometimes a straightforward conversation or mediation-style chat can fix the issue faster and with less drama.

But:

• If the grievance is serious (e.g. bullying, harassment, discrimination, whistleblowing), go formal.
• If the employee has clearly asked for a formal grievance, don't ignore that and pretend it's informal.

You can explore informal resolution, but you still need to respect their right to a proper grievance process under your policy and the ACAS Code.

Step-by-step grievance process for small businesses

The ACAS Code sets out the skeleton; you adapt it to your size.

A sensible minimum process:

1. Written grievance
   Ask the employee to set out their grievance in writing: what happened, when, who was involved, what outcome they want.
2. Acknowledge and plan
   Acknowledge receipt. Decide who will handle it — ideally someone not directly involved in the complaint (in micro-businesses this might just be you, and that's okay if you're transparent).
3. Investigate
   Speak to relevant people, gather documents, messages, CCTV etc. Keep an open mind; this stage is fact-finding, not judging.
4. Invite to grievance meeting
   Send a written invite with reasonable notice, explaining they can be accompanied by a colleague or trade union rep.
5. Hold the grievance meeting
   Let the employee explain their concerns and how they'd like them resolved. Ask questions to clarify; don't argue your case at this point.
6. Decide and confirm outcome in writing
   Decide what's upheld, what isn't, and what action you'll take. Explain your reasoning and next steps in a letter/email.
7. Offer a right of appeal
   The employee should be told they can appeal and how to do it, usually in writing within a set timeframe.

In a bigger business, different people run investigation, hearing and appeal. In a very small business, that's not always possible; tribunals recognise that — but you still need to follow the principles of fairness.

Common grievance own goals that small employers make

The things that really annoy tribunals (and employees):

• Ignoring the written grievance or sitting on it for months.
• Treating it as a personal attack and getting defensive instead of investigating.
• Running a "chat" that looks and feels like a formal meeting but never recording anything.
• Failing to give a clear written outcome and appeal route.
• Punishing someone for raising a grievance (which can trigger victimisation / whistleblowing claims).

What if the grievance is about a manager (or about you)?

If the grievance is about the line manager:

• Have a more senior manager or owner handle it where possible.
• Make sure the line manager doesn't control the process or the outcome.

If the grievance is about you as the owner:

• Consider using an external HR consultant or solicitor-led HR service to investigate or at least advise on process.
• Document why you chose the person you did and how you'll keep it as objective as possible.

Tribunals understand small firms can't conjure up a whole new management layer out of nowhere. What they want to see is that you have tried to separate the roles and handle it fairly.

How grievances link to disciplinaries, sickness and performance

Grievances rarely live in a vacuum. You often see them:

• Raised mid-disciplinary or performance process — see what happens when a grievance lands mid-performance process.
• Wrapped up with allegations of bullying, discrimination or harassment.
• Linked to sickness absence — particularly relevant when grievances are wrapped up with sickness absence and stress.

The ACAS Code expects you to pause and look properly at grievances, especially where they relate to ongoing disciplinary or performance issues.

You don't automatically have to stop everything, but you do need to decide whether to:

• Deal with the grievance separately, or
• Fold it into the existing process with clear, recorded reasoning.

Where legal risk and privilege creep in

Grievances are often the pre-game warm-up for tribunal claims.

Once someone has put concerns in writing, particularly around discrimination, harassment or whistleblowing, you're in a higher-risk zone. And why Employment Rights Act 2025 changes make grievances even higher stakes is something every small employer should read before they're sitting in front of a complaint.

At that point, you want:

• HR process that clearly follows the ACAS Code.
• Legal input on risk, options and settlement strategy where appropriate.
• Sensitive communications with lawyers, not splurged in long email chains with non-lawyer HR providers.

There are also situations where the grievance itself becomes entangled with ownership — for instance, when the grievance involves a shareholder-employee — it gets complicated fast.

How Electra HR helps small businesses handle grievances

Electra HR is built for exactly this kind of moment: you want to do the right thing, but you also don't want to hand your future self a tribunal file.

We can:

• Help you set up a simple grievance procedure that follows the ACAS Code but fits your size.
• Advise on live grievances — what to investigate, who should run it, and how to document it.
• Support you if the grievance overlaps with disciplinaries, performance, sickness or potential exits.

Because we're powered by Bonsai Law, an SRA-regulated firm, we can also bring in solicitor-level advice and legal privilege where you need it — rather than guessing and hoping for the best.

Find out more about our HR and employment law support for handling grievances, or talk to us about handling a grievance fairly.