Employers warned of tribunals risk
By admin
Employers are being warned to take extra care when implementing redundancy programmes after reports that about twice as many cases are being brought before Employment Tribunal as there were at the start of the year.
And with economic forecasters predicting increases in redundancies and unemployment in Wales this trend is likely to continue, says Fflur Jones, an Associate Solicitor and specialist in employment law at Darwin Gray Solicitors in Cardiff.
“The numbers of redundancies are rising so you’d expect the number of tribunals to rise too but this alone doesn’t account for the increase. Perhaps employers, under pressure from all sides, aren’t being as careful as they should or perhaps they’re not aware of relatively recent changes in employment law. But it is also quite likely that employees are feeling increasingly litigious, faced as they are with diminishing job prospects and tough financial circumstances.
“In this economic climate it is quite clear that employers need to exercise extra care both in the manner in which employees are selected for redundancy and the manner in which redundancy consultations are carried out.
”The pitfalls of getting it wrong are significant: if an employee successfully claims that there was no genuine reason for the redundancy, the Tribunal will award them a ‘basic’ sum – equivalent to statutory redundancy pay, if they have not already been paid that. In addition, they will also award a sum on account of their loss of earnings until they manage to find another job. As times are hard, prospects of finding other jobs are consequently low, so employers can be faced with the prospect of paying a hefty compensatory award to the employee.
”Another common pitfall is that the procedure followed in making the employee redundant is skewed. Then, employers can also be made to pay an uplift of between 10 and 50% on that compensatory award by the Tribunal.
“And on top of this, employers must understand that if any employee suspects their purported redundancy is connected in some way to any of the grounds protected by the UK’s discrimination laws, they will not hesitate to bring that claim to the Tribunal. And they must also understand the full breadth that the discrimination laws now cover – age, sex, race, disability, sexual orientation, religion or beliefs and part-time working. While awards for injury to feelings caused by discrimination under any of these strands are usually relatively small sums, employers must realise that they are not capped.
”And finally, in addition to all these potential awards, employers will also be expected to pay their lawyers’ fees as each party usually bears their own costs.”
But there are positive steps that employers can take to avoid facing Employment Tribunals, says Fflur Jones.
1 If redundancies are to be made, make sure that there is a genuine business reason behind them that justifies the decision to make an employee redundant, and that you are not merely using ‘redundancy’ as a ploy to remove any dead wood.
2. Select the employees that are risk of redundancy carefully. Ensure that your ‘pool’ of employees is sufficiently wide to catch those employees who perform similar jobs, or if you wish to use a narrow pool, make sure that you are able to justify that pool easily to employees within it.
3 Check the numbers of potential redundancies that you are looking to effect – if the number is below 20 you will be able to follow your own company’s internal redundancy procedure. If more than 20, then you need to inform the Department for Business Enterprise and Regulatory Reform (DBERR) about the planned redundancies – and you must enter into a period of consultation with the affected employees that lasts at least 30 days. If the number is more than 100, then that consultation period must be 90 days.
4 If you are looking at an incremental number of redundancies, check that you do not go over 20 in any 90 day period. If you do, you will need to inform DBERR that this is the case, and enter into consultation periods along the lines mentioned above.
5 Consult appropriately and meaningfully with employees and / or their elected representatives. Try to show them that you have considered alternatives and that you are committed to keeping them in work if at all possible. Listen to what they have to say and consider their representations carefully.
6 Ensure that the redundancy procedure followed is also compliant with your disciplinary procedures – or at the very least with the statutory dispute resolution procedures.
7 Ensure that you calculate the employees’ redundancy packages correctly, and give notice of it to them when dismissal by reason of redundancy is to be confirmed. They have a statutory right to be provided with this information.
8 Try keeping your employees abreast of redundancy developments that may affect them. If employees are kept in the know, rumours about the genuineness of the reason for the redundancies and the way employees are treated will be less likely to circulate and escalate.
”Anyone in doubt should seek specialist legal advice,” added Fflur Jones. “Individuals, as well as companies are experiencing difficult economic times at present and employees are more likely to resort to litigation if they feel that they have any grounds for a better financial package. The bottom line is that redundancy procedures need to be more precise than ever.”
Tags: Darwin Gray, employment tribunals, Fflur Jones, legal advice, redundancies, Wales
