UK businesses are failing to comply with basic employment law, with many risking legal action by not issuing contracts or using formal disciplinary procedures, new research has revealed.

A survey by Peninsula found that 29 per cent of employers did not issues contracts to staff, leaving them vulnerable to potential court cases for unfair dismissal or discrimination.

Just 62 per cent of those polled issued their employees with written disciplinary procedures.

Perhaps most worryingly, 82 per cent of bosses admitted that they have sacked an employee, for reasons other than gross misconduct, without giving him or her a formal warning.

With the number of employees prepared to bend the truth in order to claim compensation pay-outs from firms, the lack of businesses protecting themselves is concerning.

Previous studies have shown that many bosses also do not have employers’ liability insurance, which is required by law and helps protect firms from legal claims.

Peter Done, managing director of Peninsula, said that it’s essential that employers get it right in the beginning.

“They have to ensure that they have water-tight HR policies in place and ensure that they issue employee contracts in a specified time.

“The failure to issue an employee is a breach of employment law and could easily be seen as a case for litigation.

“An employee has the right to know what the disciplinary procedure is in place and also how to appeal should they feel that it is unfair.

“I have found that there is a common rule that the employee knows more about their rights than the employer does and this seems to be an increasingly proven,” he said.