The recession is causing a rise in the number of Employment Tribunal claims brought by former employees challenging their dismissals, according to the leading regional law firm Howes Percival.
Redundant workers are worried they face a long period of unemployment or a significant cut in earnings even if they do find another job. And the disgruntled workers are also claiming larger amounts of compensation. But employers are increasingly seeking to head off any potential claims by the use of compromise agreements with departing staff. Employees agree to waive their right to contest dismissal in return to enhanced redundantly pay. We have noticed a rise in the number of Tribunal claims being brought by employees. Employers who have dismissed employees for genuine reasons such as redundancy or poor performance and who in the past would not have faced a Tribunal claim, are now finding that employees are challenging their dismissals. They feel they have nothing to lose by doing so and they do not have other jobs to go to immediately or the prospect of getting employment for some time.
The amount of compensation being claimed by employees is also on the rise, with claims for 12 months' loss of earnings becoming the norm compared to the typical 3 – 6 months we were seeing just a year ago. And in a recession, when job vacancies are scarce, it is harder to persuade a Tribunal that an employee has not made a reasonable effort to find alternative employment Any businesses worried about the time-consuming and expensive process of defending Employment Tribunal claims, and potentially adverse publicity, should act now to limit the risk of such claims. By following the correct procedures in carrying out dismissals, you reduce the chances of an employee being able to challenge their dismissal.
Employers need not be afraid of robustly defending claims where correct procedures have been followed. Tribunals are increasingly willing to award costs against employees where their claims have no reasonable prospects of success.
Another tactic employers can consider is the compromise agreement. Mirroring the rise in Employment Tribunal claims is an increase is the popularity of compromise agreements Many businesses are now more often considering the use of Compromise Agreements when seeking to dismiss employees or make redundancies. They enable employers to manage the risk associated with dismissal by setting a limit on the amounts that are to be paid to an employee and removing the risk of a Tribunal claim. This also has the added benefit of saving legal costs and management time spent dealing with such claims.