Microbusiness Contract

Key takeaways

Ofgem defines a microbusiness using employee/turnover criteria or energy-usage thresholds.

Microbusiness contracts have extra protections, including limits on termination notice periods.

Microbusinesses have specific guidance around brokers/TPIs and fee transparency.

What is a “microbusiness” for energy?

Ofgem’s current guidance says you’re a microbusiness if you have:

1. fewer than 10 employees (or FTE) and turnover/balance sheet total of no more than £2m, or
2. you use no more than 100,000 kWh of electricity per year, or
3. you use no more than 293,000 kWh of gas per year.

(You only need to meet one of those tests.)

Key protections microbusinesses should know

From Ofgem’s Microbusiness Strategic Review decision, suppliers must ensure:

1. termination notice periods are no longer than 30 days, and
2. microbusinesses have stronger rights around terminating contracts (including being able to give notice at any time in certain circumstances).

Separately, Ofgem has expanded transparency expectations around broker fees in contract principal terms (market-wide from 1 October 2024).

Practical checklist before you sign or renew

1. Confirm you qualify as a microbusiness (it changes what protections apply).
2. Check your end date and any renewal language.
3. If you used a broker, check how fees are shown in the contract paperwork.

Sources

1. Ofgem: Get energy for your business (microbusiness definition and thresholds)
2. Ofgem: Decision on the Microbusiness Strategic Review (notice period limits and termination rights)
3. Ofgem: Third Party Intermediaries guidance for microbusinesses
4. Ofgem: Press release on greater protection for businesses (broker fee disclosure expanded from Oct 2024)