You don't lose the whole army, you just lose the battle. I had that before in RTR, and I got really angry. Was fighting in the square, and the Illyrians had a unit at half strength and the timer just ran out and my general gained a trait which took off a command star when attacking walls. Fortunately the taking of that city afterwards and a few more cured this.

The Illyrian cities did really get me worked up though, because the timer ran out if you didn't make your troops run all the way up.