Informal Management: A Growing Legal Risk

Informal management is one of the biggest, and least recognised, employment law risks facing employers right now.

January is often when business owners pause, reflect and look ahead. With a new year comes renewed focus, but it also brings unresolved people issues back into view. Performance concerns that were quietly tolerated before Christmas, awkward conversations that felt easier to avoid (especially before Christmas, with the sensitive manager in us not wanting to “spoil” Christmas), and long-standing situations managed “by instinct” tend to resurface quickly once normal working life resumes.

At HR:4UK, we see this pattern every year. Increasingly, the problem is not that employers are doing nothing, it’s that they are managing issues informally, without realising how exposed that can leave them from an employment law perspective.

This is not about new legislation. It is about how existing employment law is being applied by tribunals, and the growing expectation that employers manage people issues in a fair, consistent and evidenced way.

Why Informal Management Is Under Scrutiny

Many SMEs manage people based on relationships, trust and goodwill. They know their employees well, want to be supportive, and genuinely try to do the right thing. Formal processes can feel heavy, confrontational or unnecessary, particularly in smaller teams.

We often hear employers say that they have “had a few chats”, that the employee “knew there was an issue”, or that they deliberately avoided anything formal because they wanted to be kind or flexible. From a human point of view, this is understandable. From a legal point of view, it is where risk starts to build.

What is intended as kindness by an employer is not always experienced as kindness by an employee, particularly where issues have been managed informally for some time and a more formal approach is suddenly introduced.  This is often the point at which relationships begin to break down.

Employment tribunals are not interested in what an employer intended to do. They focus on what actually happened and, crucially, what can be evidenced. When management is informal, those conversations are rarely documented, expectations are often unclear, and there is little proof that concerns were properly addressed.

As a result, employers can find themselves in a very difficult position when matters escalate.

Unfair Dismissal Risk and the Problem of Proof

Unfair dismissal claims frequently stem from informal management. By the time an employer feels dismissal is unavoidable, they may have months, or even years, of frustration behind them, but very little on paper to support their decision.

Tribunals will ask whether concerns were clearly explained, whether the employee was given a fair opportunity to improve, and whether the employer acted reasonably throughout the process. Without written records, structured reviews or evidence of support, employers often struggle to demonstrate that a fair process was followed, even where there was a genuine issue.

This is where informal management becomes legally dangerous. The gap between what the employer believes and what they can prove is often what determines the outcome of a claim.

Inconsistent Management and Discrimination Risk

Another significant employment law risk linked to informal management is inconsistency. When issues are dealt with on a case-by-case basis, rather than through a consistent framework, employers can unintentionally treat employees differently.

This often happens without any discriminatory intent. A long-serving employee may be given more leeway. A more vocal employee may be challenged sooner. Someone who appears sensitive or stressed may be handled more gently. Over time, these differences in approach can create serious legal exposure.

Inconsistent management is a common trigger for discrimination claims. When employees compare how they have been treated to others, informal decision-making becomes very difficult to justify. Tribunals are particularly alert to situations where similar issues have led to very different outcomes.

The Hidden Danger of Quiet Tolerance

One of the most common themes we see at HR:4UK is what we describe as quiet tolerance. This is where performance or behaviour issues are known, discussed informally, but never properly addressed.

From an employer’s point of view, it may feel supportive or pragmatic. From an employee’s perspective, however, it can reasonably be interpreted as acceptance. Over time, standards slip, expectations blur, and the business quietly absorbs the impact.

When action is eventually taken, employees are often shocked. They may feel blindsided, unfairly treated or singled out. Legally, this is where employers are most vulnerable, because tolerance over time can undermine the justification for later action.

Why Policies Alone Don’t Protect Employers

Many businesses assume that having policies in place is enough. Unfortunately, tribunals take a different view. Employers are expected not only to have procedures, but to follow them consistently.

We regularly support employers who have robust disciplinary or performance management policies, but who have not applied them in practice. When a business departs from its own procedures, particularly without good reason, it weakens its legal position significantly.

Informal management often bypasses these processes entirely, which is why it creates such risk.

A Better Approach to Managing People Lawfully

Managing people effectively does not mean becoming overly corporate or heavy-handed. It means being clear, fair and consistent. Addressing issues early, setting expectations properly, and keeping simple records of key conversations can make an enormous difference.

From our experience, employers who seek HR advice early are far better protected. Structure does not damage relationships,  in fact, it often prevents misunderstandings and resentment from building over time.

As employment tribunal risk continues to rise, informal management is becoming harder to defend. Employers who rely solely on memory, goodwill and verbal conversations are increasingly exposed.

What This Means in Practice for Employers

From a practical point of view, this does not mean employers need to become overly formal or bureaucratic. What it does mean is being clearer earlier, having more honest conversations when things are not working, and making sure those conversations are followed up in writing. Expectations should be set properly, concerns should be addressed consistently, and managers should feel confident using the processes that already exist, rather than avoiding them. Seeking HR advice at an early stage often prevents issues from escalating and protects both the business and the employee in the long run.

The HR:4UK Perspective

At HR:4UK, we are increasingly supporting employers who believed they were doing the right thing, only to discover that informal management has left them legally vulnerable.

Good people management is not about being harsh or inflexible. It is about fairness, clarity and consistency. When done properly, it protects employees and employers alike.

If the start of the year has prompted you to reflect on how people issues are managed in your business, now is the right time to act. Putting the right foundations in place early can prevent far more difficult, and costly, situations later on.