Four members of staff, no HR function, and a genuine complaint from one of them about how another was treating her in front of customers. My instinct at the time was to treat it as a personality clash — have a quiet word with both of them separately, smooth it over, move on. It felt efficient. It felt like the kind of thing a small, informal team should be able to sort out without turning it into A Whole Process. It was the wrong call, and it's worth being specific about why, because the instinct that led me there is an extremely common one in small businesses.
Why the informal route felt right
In a small team, everyone knows everyone, and there's a real, understandable pull towards handling things the way you'd handle a disagreement between friends — a conversation, an apology, everyone moves on. Formal process feels like it belongs to bigger companies with HR departments, not a business with four people in it. That instinct isn't stupid. Most day-to-day friction genuinely doesn't need a formal grievance procedure. The mistake was applying that same instinct to something that wasn't day-to-day friction — it was a specific complaint about being spoken to in a way that made someone feel undermined and, on a couple of occasions, humiliated in front of customers.
What actually went wrong
I had a private word with the person the complaint was about, who was defensive and dismissive, and a slightly awkward conversation with the person who'd raised it, essentially asking her to let it go for the sake of team harmony. Nothing was written down. No timeline, no clear outcome, no follow-up. Within a few weeks the same behaviour resurfaced, and this time the employee who'd raised it originally felt — reasonably — that she'd raised a legitimate issue and been asked to absorb it rather than have it dealt with. She left within two months, and told me plainly on her way out that the handling of the complaint was the actual reason, more than the original behaviour itself.
Staff rarely leave over the first problem. They leave over what happens after they raise it and nothing changes.
The rules I didn't know applied to a four-person business
Here's the part I'd genuinely assumed was for bigger employers. Every UK employer, whatever its size, has to give employees a written statement of employment particulars on or before their first day, and that statement has to say how a grievance can be raised and who to raise it with. There's no small-business exemption. I hadn't done it, which meant the employee had no stated route to raise anything — the process was whatever I decided it was on the day.
The Acas Code of Practice on disciplinary and grievance procedures sits behind that, and it applies to a team of four exactly as it does to a team of four hundred. It isn't long or legalistic — it asks for the complaint in writing, a meeting without unreasonable delay, the employee's right to be accompanied by a colleague or trade union representative, a decision communicated in writing, and a right of appeal to someone else where possible. The practical sting is that an employment tribunal can adjust a compensation award by up to 25% where an employer unreasonably failed to follow it. Nobody had to sue me for that to be the wrong risk to carry.
The cost, specifically
Losing her cost real money — recruitment, the productivity gap while a replacement got up to speed, the knowledge that left with her. But the less obvious cost was what it signalled to everyone else on the team: that raising a genuine concern got you a quiet word and a request to move on, not a real process. That's the kind of thing staff notice and remember, even when nobody says it out loud, and it makes the next person with a genuine grievance less likely to raise it at all — which is a far worse outcome than an awkward formal conversation would ever have been.
There was a legal exposure underneath it too, which I only understood later. An employee who resigns because the employer has fundamentally broken the working relationship — and failing to deal with a serious, repeated complaint can qualify — may have a constructive dismissal claim. If the behaviour complained about relates to a protected characteristic, the exposure is broader still and has no qualifying service requirement. I got lucky rather than clever.
What a proper process actually looks like
It didn't need to be complicated. A genuine complaint deserves a proper meeting, with the complaint written down in the employee's own words, a clear and honest conversation with the person it's about, a documented outcome, and a follow-up check-in to confirm whether things have actually changed — not just assumed to have changed because the conversation happened. None of that requires an HR department. It requires treating the complaint as something with a beginning, a middle and an end, rather than something to be smoothed over and quietly hoped away.
In practice the whole thing fits on one page. Ask for it in writing, or write down what they told you and have them confirm it's accurate. Arrange a meeting within about five working days and tell them they can bring a colleague. Listen more than you talk, and don't decide in the room. Put the person complained about on notice of what's been said and hear their side properly. Write the outcome down — what you found, what happens next, by when — and hand it over. Say who they can appeal to. Then diarise a check-in for a month's time and actually keep it.
The bits I'd underline from experience: don't investigate and decide and hear the appeal all yourself if there's any way to avoid it — a business partner, a fellow director, even a trusted external HR contact can take one of those roles. Never promise confidentiality you can't deliver, because you usually have to put the allegation to the other person for the process to be fair. And where the complaint is about you, get someone else to handle it; there's no version of judging a complaint about your own behaviour that looks fair to the person who raised it.
What changed after
Every complaint since, however small it seems, now gets the same basic structure: written down, addressed directly with whoever it concerns, a clear expectation set, and an actual follow-up. It takes longer than a quiet word. It has never once cost us a member of staff the way the informal version did, and more than once it's surfaced a genuine pattern early enough to fix quietly, before it became the kind of thing someone resigns over.
The lesson underneath it
The uncomfortable realisation wasn't that formal process is always necessary — plenty of workplace friction genuinely doesn't need it. It was that I couldn't reliably tell, in the moment, which complaints were minor friction and which were the kind that would fester and cost someone good their job satisfaction. Once I stopped trying to make that judgement call on instinct, and just gave every genuine complaint the same basic fair process, that problem went away — and so, notably, did the sense among the team that raising something wouldn't actually go anywhere.
What I'd say to a smaller version of myself
It's tempting to think a formal-ish process is something you graduate into once the team is bigger, once there's a manager whose job it partly is, once it feels like it fits. In practice the size of the team has almost nothing to do with whether a complaint deserves to be taken seriously — a four-person team has just as much capacity for someone to feel genuinely undermined as a forty-person one does, and far less cushioning if it goes wrong, because there's nowhere for a strained relationship to hide. The process doesn't need to scale up with headcount. It just needs to exist from the first time someone raises something real, which for most small businesses is earlier than they expect.
If you do one thing this week, write the half-page grievance procedure and put it in your contracts and your written statements. Acas publish a free template you can adapt in twenty minutes. Twenty minutes now, or a resignation and a possible tribunal claim later — put like that, it isn't a close call.
