If you believe the maxim, ‘prevention is better than cure’ then read on. To save money, time and the hassle of dealing with a dispute that threatens to go to an employment tribunal, don’t let it occur in the first place. It’s impossible to be completely watertight, as any policy you introduce will be open to human error, but if you’ve taken every possible precaution the chances of shelling out for a disgruntled ex-employee will dramatically reduce.
Employment tribunals were set up to provide a more informal and accessible forum for resolving industrial disputes. A panel of three adjudicate on cases – a legally qualified chairperson and two lay members, one representing workers’ organisations and the other nominated by employers' organisations. But while tribunals were introduced to avoid claims going to the law courts, it has instead become a legal minefield, clogged up with cases as companies leave themselves open to attack and employees assert their rights.
Why are they important?
Employment tribunals are far more than a mild annoyance. You not only face the threat of a substantial pay-out to the disgruntled ex-employee, which could bankrupt some small businesses, plus legal fees, but you and your management team will have wasted ridiculous amounts of time dealing with the problem.
And aside from time and money, can your business cope with the negative side-effects? Low morale in the office, continued problems with unions and bad PR can hit your business' productivity, add unwanted strife and you could also damage a good reputation, not to mention hitting you where it really hurts – your pocket.
Awards and costs
According to figures from the Ministry of Justice, in 2009-10 the average award for unfair dismissal cases was £9,120. Should a former employee win such a case, the award will be made up of a basic award based on their age, length of service and the amount of a week’s pay (up to £400), and a compensatory award, which covers loss of earnings up to a statutory limit. As of 1 February 2011, the maximum compensatory award for a ‘normal’ dismissal increased to £68,400.
Where the employer failed to follow a fair process (this used to involve adhering to the statutory dismissal procedure, but now requires “reasonably” following the guidelines laid out in the Acas Code of Conduct), the compensatory award can be increased by up to 25%.
And there is no limit whatsoever on awards for discrimination claims, so it is even more important you don't fall foul on that count.
Furthermore, unlike other courts, employment tribunals don’t usually order either side to pay costs. So even if you ‘win’, the chances are you will still have to pay yours.
According to Acas, the number of tribunal hearings typically increases at a time of economic downturn, as restructurings, redundancies and changes to staff contracts become more commonplace. Official statistics suggest this is being played out; in 2009-2010 a total of 236,100 tribunal claims were accepted, up from 151,000 in 2008-9. The top five claims were for: breaches to the Working Time Directive; unauthorised deductions from wages; unfair dismissal; breach of contract and equal pay respectively.
Being a good employer is more important than ever before. But if you do end up before the beak, don't fret. Employment tribunals are a fact of business life and chances are you’ve either faced one, are about to face one or will be facing one in future.
The Employment Tribunals Service
For advice on how to respond to a claim, including downloadable forms, and what to expect from the hearing.
For advice on resolving disputes in the workplace and information on free mediation services.