Small Business Commissioner

  • The self-employed are the smallest of small businesses. All too often they have to deal with the difficulties of late payment and unfair contract terms, or find themselves in a contract dispute.
  • They often cannot afford to resort to court action, either because of the expense or the reputational damage it would cause.
  • In Australia, businesses can turn to an independent body to help settle such disputes, whether the dispute is with Government or with another business. It provides conciliation, arbitration, advice and dispute resolution services.
  • This solution avoids the need for lengthy court action, preserves business relationships, and is self-funding by charging a small fee to its users for advice.
  • IPSE proposed that a similar should be introduced in its manifesto in 2014
  • The Government has now committed to introducing a Small Business Commissioner in the UK and is considering the scope and powers the Commissioner should have.

What is the problem?

  • Small business and the self-employed have little power to resolve disputes with larger clients or customers. The balance of power in such disputes will always favour the larger party.
  • Issues can often arise regarding issues such as late payment, unfair contract terms, contract disputes and disagreements over intellectual property. Although commercial negotiation is usually possible, there are instances where this can fail. Small businesses, in particular the self-employed face huge problems with late payment – surveys have shown 85% of small business having experienced late payment in the last two years
  • Small businesses, and especially the self-employed, need a way of solving disputes which does not require resorting to the courts. Court action is expensive, lengthy, and not a guaranteed route to success. It can damage relationships and make the small business look like a ‘difficult’ customer. This can jeopardise existing working relationships or ruin the reputation of a small business or self-employed person.

How would a Small Business Commissioner help?

  • It would provide advice: Often businesses and sole traders are unaware of the rights they have to pursue issues such as late payment. They may also not know where they can turn to for support. A small business commissioner would be both a provider of advice and a ‘signposting’ service to other agencies that may be able to help.
  • It would stop issues from escalating, preserving relationships: A key function of the small business commissioner would be to preserve business relationships and prevent escalation to an overburdened judicial system. By facilitating conciliation and mediation services, much like ACAS does in employment relationships, issues would stop going to court as action that both sides agree on can occur. One potential benefit of this is late payment cases in the small claims court would become far less common.
  • It would ensure the balance of power is fair: A small business commissioner would independently criticise a business or industry which is guilty of bad practice, adding extra clout in a dispute by reminding them of their legal obligations and ways of fulfilling them. In cases where the commissioner is unable to come up with a solution and a dispute does go to the courts, the fact that a complainant sought to resolve the situation first through the commissioner would be seen as evidence of positive intentions.
  • It would be able to suggest ways forward which benefit both sides in a dispute, by acting as an ‘honest broker’: A small business commissioner would be able to suggest a way forward for both parties in dispute, as it has nothing to gain and is acting independently. Its determinations would therefore be trusted.