A dramatic rise in employment tribunal claims for unfair dismissal and discrimination will be another fall out of the credit crunch, as some businesses will fail to carry out redundancy planning as they should, warns a top employment lawyer.
Philip Richardson, an employment solicitor with Manchester law firm Stephensons Solicitors LLP, said: “In 2007/8, 189,348 cases were heard at employment tribunals, 45,000 more than the previous year, while the number of claims disposed of decreased from 107,412 to 86,237.
“Employment tribunal claims are a costly exercise whatever the size of business, not only in terms of money, but also in terms of time, loss of reputation and loss of morale to other employees.”
Philip added: “Many of those claims which were heard at a tribunal involved claims for unfair dismissal, and with the dreaded R-word now a common part of 2008 business life, and many firms contemplating cutting costs by trimming their workforce, managers must be aware of the procedure when it comes to redundancy or risk becoming another costly statistic.”
Philip has the following tips for business owners:
“Redundancy is a minefield you should not step into without first taking professional advice. Do not react too quickly and dismiss employees – instead speak to a legal advisor who can advise you as to the steps you should follow.
“Where more than 20 employees may be facing redundancy, consultation with employee reps or trade unions is required, as well as individual consultation. Only after this has taken place can notice be given after following a minimum legislative procedure.
“Identify the groups of employees at risk of redundancy early on, to avoid unnecessary uncertainty among those who are safe. Again, selecting those who will exit the business must be done objectively using selection criteria which does not have the potential to discriminate.
“Identify how much each individual is entitled to – this includes contractual or statutory notice and redundancy payments. Statutory redundancy payments are based on length of service, age, and salary. You may also need to take into account employee pensions.
“You must consider any alternative vacancies and also beware of any future recruitment you may have planned. Vacancies which may be appropriate to those being made redundant must be offered to them first, otherwise it could be a provocation which leads straight to a costly employment tribunal.
“Remember that redundancy is about stream-lining your business to make it more efficient in this tougher economic environment. Ensure you look after the staff who remain, keep morale up and the communication lines open at all times.”
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