Barrister Professor Rudi Klein considers what impact the small business commissioner will have on small businesses working with larger organisations and on the handling of complaints about payment.
There will be a new kid on the block in 2016 – the small business commissioner. The commissioner’s jurisdiction will extend to the whole of the UK and is a creature of the Enterprise Bill, which is due to become an Act during 2016.
The office of the commissioner
The commissioner’s boss will be Sajid Javid, the business secretary. The initial term of office will be four years; a deputy commissioner may also be appointed, and the extent to which the commissioner will be resourced will be determined by the business secretary.
What will the commissioner do?
The commissioner will have two functions:
- To provide general advice and information to small firms, and
- To consider complaints from small firms relating to payment matters
A small firm is a business employing less than 50 people.
Provision of general advice and information
The commissioner will issue general guidance to small firms to help them in their supply relationships with larger businesses. The guidance should be aimed at helping small firms to prevent or minimise disputes with larger businesses.
The guidance may relate to matters such as rights, obligations applying to the supply of goods or services, and dispute resolution. Advice may be given about complaints-handling bodies, such as ombudsmen, or about regulations or statutory rights to refer disputes to adjudication (or arbitration). Such guidance may also be given in connection with contracts with public bodies. The information provided must be given on an impartial basis.
In legislating for the small business commissioner, the government has trumpeted the power of the commissioner to determine payment complaints against larger businesses. A payment complaint will generally relate to a failure to pay an amount which has been requested or has become due. Larger businesses will include all firms other than small businesses – those with 50 or fewer employees.
On referring the complaint to the commissioner, the complainant may be invited to furnish relevant documents. The commissioner must give the responding party an opportunity to make representations. In determining the complaint, the commissioner is required to act impartially; his/her decision must reflect that which is “fair and reasonable in all the circumstances of the case”. The commissioner’s determination must be in writing and he/she must provide reasons for his/her decision. Regulations will be issued to set out in more detail the procedure for making complaints.
Will the commissioner make any difference to small firms in construction?
The appointment of the commissioner will, no doubt, give rise to much fanfare. But as far as construction is concerned, his/her presence is likely to go unnoticed. Why is that?
As far as the power to issue guidance is concerned, it is difficult to assess the added value here. Small firms already have access to guidance from a variety of services, not least their trade associations.
With regard to complaints-handling, it is unlikely that small firms in construction will make use of this facility for a number of reasons:
- The climate of fear that exists in the industry will deter firms from using the service.
- Industry-bespoke contracts/subcontracts could bar complaints being made to the commissioner (although a small firm could complain to the commissioner about this).
- The commissioner’s decision can be ignored; it is not legally binding.
- If the payment complaint can be referred to statutory adjudication, the commissioner cannot deal with it; this is likely to exclude the overwhelming majority of complaints!
The government will, of course, claim that in introducing the commissioner, it is demonstrating its support for small businesses. But, in truth, the commissioner could end up with little to do. The government will then, most likely, abolish the role on the basis that it had tried to help but small firms had chosen to refuse such help. In fact, the government could get rid of the role with ease even though it was introduced by primary legislation. The saying ‘all bark and no bite’ comes to mind.