Costs warning to SMEs over tribunals surge
Businesses are being warned to ensure their human resources processes are watertight or face expensive consequences.
This follows an explosion in the number of people taking their employers to employment tribunals.
Hannah-Jane (H-J) Dobbie (pictured), head of HR consultancy at UK Top 10 accountancy firm Azets, says this includes claims for failing to follow a proper redundancy process, wrongful dismissal, unfair dismissal, discrimination, and additional claims for injury to feelings.
She said: “Employees with grievances appear to be far more likely to take matters further than they would have been in the past. And the onus is on the employer to disprove the claim, rather than the employee to prove it, which can be difficult.
“I believe it is very much due to the state of the candidate-driven recruitment market. People know that they can walk out of a job, make a claim, and still walk into another job, potentially quite quickly, especially if they have an in-demand skill set. ”
Latest ONS figures put the UK employment rate at 75.6 per cent and rising, with unemployment at just 3.8 per cent. Estimated job vacancies are 1.3 million.
H-J added: “There are a lot more claims coming forward which would likely never have got to the tribunal hearing stage previously. A lot of them, I would say, are spurious claims, or employees trying their luck, but it seems to be becoming the way of the world and we are edging towards the USA 's claims culture.
“Many more employees are taking a chance on taking tribunal action. It doesn 't cost them anything to go to a tribunal.
“However, the average cost for fighting a tribunal for an employer - without including any awards made - is around £10,000 per day once you include legal fees, and the management time and resources taken up dealing with such matters.
“My concern is that it has got to the point where people see you can make a quick buck by doing something like this and therefore, they are jumping on the bandwagon. Even people dismissed during their probationary periods are raising tribunal claims these days.
“Companies with money may choose to fight claims they know, or suspect, are wrong. For smaller businesses there can be a grave financial risk in going to tribunal - that 's why many are taking advantage of the ACAS early conciliation process and settling prior to any preliminary tribunal hearing, even when they know they have a case, as the time costs alone are prohibitive. ”
Latest HM Courts and Tribunals Service statistics show the wait time for a single claim tribunal is around a year and deep into 2024 for multiple claims in some regions.
H-J 's advice to SMEs and other businesses is to be scrupulous in dealing with all human resources matters.
She adds: “When you are making decisions about terminating an employee 's employment, regardless of the reason why, you need to make sure a) you are following proper process and b) that you are, where appropriate, following the relevant ACAS Code of Practice.
“This is also a warning shot across the bows to businesses with regards to discrimination, whistleblowing, and having a contract or at least a written statement of particulars in place from day one, any of the things that are day one rights for employees, where they don 't need two years of service to make that claim.
“It is extremely easy now for employees to make claims and it is becoming harder for employers to defend them. If you want to make certain decisions make sure you seek advice and follow a proper procedure to avoid putting yourself in a demanding and potentially expensive situation. ”