Credit crunch redundancy tribunal warning

Estate agency bosses and finance companies are being urged to check their employment contracts for loopholes as the credit crunch forces sweeping redundancies.

According to a forecast by the CBI, at least 10,000 jobs could be lost in the UK’s financial services industry over the next three months and estate agencies are closing at a rate of 150 branches a month, with 4,000 job cuts already this year.

Experts at national HR specialist Deminos warn that unless employee contracts are watertight, the inevitable job losses could end up costing thousands of pounds at the tribunal court.

Last year in the UK there were more than 130,000 employment tribunals – a staggering 530 per working day – with the average payout for an unfair dismissal costing employers £7,974, as well as the court costs involved. 

In total this can run into tens of thousands of pounds.

But Neil Atkinson, director of Deminos on Gateshead’s Watermark business park, said that by taking a few preventative steps, companies can avoid paying these extra costs.

He said: “Redundancy is never an easy path to take for a company but there are steps to take that can make it less painful for both parties.  Prevention is always better than cure and by taking action now, companies can avoid the pain and huge expense of tribunals.

“It is likely that staff contracts and staff handbooks will already set out the agreed procedures for redundancy within a company. However, even if that’s not the case, there are certain procedures that employers have to follow to comply with the law and to be fair to their employees.

“A firm can only make someone redundant if a business is to be closed or there is less need for a particular type of job or skill. Generally, redundancy should involve consulting with employees or their chosen representatives, though employers are only obliged to do this if they plan to make 20 or more employees redundant within 90 days.

“Employers should check well in advance what their obligations are to employees in terms of notice and consultation, also how much they would need paying and what other benefits employees being made redundant are due.”

Employees also need redundancy advice and a good employer will provide for this by bringing in experts.

For example, employees will want to know how much pay they are entitled to which varies according to age and length of service.

Neil Atkinson of Deminos added:

“By taking expert HR advice, businesses shouldn’t reach the point of tribunal in the first place. We are so confident of the advice we offer that we guarantee to pay for the cost of any defence, award and settlement of any case that goes to tribunal from a company that has followed our advice.”

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