Employers could see a surge in tribunal claims when the government’s furlough scheme ends in September this year, according to a study by insurance brokerage Gallagher.
Its Business Litigation Index found that more than half (56%) of businesses have faced accusations or claims of unlawful behaviour, with employee disputes making up the bulk of these cases (44%).
Complaints around injury, stress and illness at work have increased since 2016, it said, and are expected to remain at the same level or increase in 2021. Sectors facing the most lawsuits include IT and construction.
Gallagher predicts that employment-related litigation and redundancy claims will rise when the furlough scheme ends on 30 September as employers are forced to make staffing cuts they had been putting off.
Wrongful dismissal claims rose 17% over the five-year period, discrimination 17%, workplace harassment 13% and constructive dismissal 10%, the researchers found.
The company’s study also found that there had been a rise in claims against companies due to data leaks, with these lawsuits rising threefold between 2016 and 2020, and exacerbated by the move to remote working. It also believes there will be an increase in disputes from businesses who sought pandemic-related business interruption insurance but did not receive a payout.
Gary Fletcher, south managing director of Gallagher’s retail division, said: “Litigation is being fuelled, in part, by supply chains, Covid-19 and Brexit but in addition to this, economic downturns also usually produce a boom in disputes.
“The situation has created a perfect storm with 64% of organisations expecting business litigation to either remain at the same volume or increase this year.”
Asha Kumar, employment partner at Keystone Law, pointed to the significant backlog in cases experienced by the tribunals service.
She said: “While the Tribunals Judiciary has recently issued its roadmap to recovery to help tackle the backlog, we expect with the furlough scheme ending later this year, many UK businesses and the Tribunals service are bracing themselves for an influx in further employment tribunal claims.
“The rising number of employment tribunal claims resulting from unfair dismissal, breach of contract and redundancy is not unexpected due to the adverse economic conditions arising from the pandemic, with many businesses down-sizing, restructuring and/or closing down.”
Kumar urged employers to adhere to fair processes while making tough decisions over the future of jobs.
“Generally, employment tribunals would expect: employees to receive as much prior warning that their job is at risk; a fair selection process is carried out; and that employees are offered alternative employment, if available. Although taking these measures cannot guarantee against litigation, they do protect businesses if litigation is pursued,” she advised.
“It is also worth noting that, if there is an influx of cases as predicted, despite the Tribunals service’s plans to rebuild operational resilience, disputes will inevitably continue to take many more months to resolve from when dismissal decisions were originally taken.
“As such, it is vital that businesses keep a paper-trail which explains and justifies the reasons for decisions taken, showing how they have tried to support their employees.”