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How to avoid an employment tribunal

PUBLISHED: 16:12 04 September 2018 | UPDATED: 17:09 04 September 2018

Darren Sherborne of Sherbornes

Darren Sherborne of Sherbornes

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No one wants an employment tribunal. Here, Darren Sherborne of Sherbornes LLP tells employers how to avoid them

Employment law is never really a welcome subject for employers of any size. It’s a distraction, a hindrance and it stops you getting on with the business of making money (unless your business is Human resources). No one wants an employment law problem. However, Government statistics show employment tribunal claims are on the increase, markedly, and that means the number of employers finding themselves wrestling with a tribunal are also on the increase.

Those of us who are “In the business” know exactly why it’s on the increase. The government introduced a regime of fees for bringing a tribunal claim, and that meant the number of tribunals dropped dramatically. Then, in July 2017, the Supreme Court ruled that fees were unlawful and the fees were abolished. Tribunals predictably rose.

This increase continued through December 2017 and into 2018 at a fairly consistent rate. However, tribunal numbers have not yet returned to the levels seen before the introduction of fees. Most commentators agree this means that the rise is likely to continue until at least that point. However, these figures can be deceptive. It is accurate to set out the highest awards in the last year for particular claims, but in fact the average awards are very different.

The average award for unfair dismissal last year was £16,543; discrimination was £36,853. Still a bit of a hit for a small or medium size employer who probably didn’t want the tribunal in the first place. Added to that, the Tribunal system, stripped back when fees were introduced, is creaking with the strain, with some claims listed for hearing 12 months after they are entered.

So what are the practical lessons you can take from these rather dry facts?

While this might feel like grim reading for an employer, it does in fact remind me of some options often overlooked.

Sometimes (far too often in my opinion) employers get tied up in a complicated game of cat and mouse with an employee in the run up to a claim. Putting aside the lost productivity, management time and distraction, the legal fees alone for such a charade is lamentable. Given the average award for unfair dismissal, many employers (if they knew it was an option) would calculate the likely value of a potential claim from an employee before engaging in such games. This is fairly straightforward, but should always be done with advice. You simply work out the cost if the employee were made redundant and add it to the value of the net wage lost for a period of time you estimate that the employee will take to find a similar job. A barman for example, in the current climate, could not reasonably expect to be out of work for more than a week. A rocket scientist may need up to 6 months.

As long as there is no hidden discrimination or victimisation, then that is the cost of unfair dismissal in broad terms. So, for example, take an employee with 5 years service, on a salary of £24,000 per year, who is sacked unfairly. If it would take 8 weeks to find another job, the compensation would be 5 x £508 = £2,540 (redundancy), plus £461 x 8 = £3,692.30 (lost net wage). Added together, the cost of unfair dismissal would be c.£6,000.

Many employers who have experienced a tribunal would tell you this sum is a bargain compared to the legal fees, management time, disruption and lack of business focus that the claim inevitably brings. I am not suggesting that employers should simply ignore employment law, far from it. I am saying that when looking at options in relation to a troublesome employee, they should look at all the options, with the benefit of advice. Sometimes, the best thing for all concerned is to use employment law, and calculate the value of the claim before simply assuming that you don’t want to pay something to see the back of an employee. Now, more than ever, one option to be considered is to say, “you are fired, leave immediately, and get your lawyer to contact me”. It won’t always be right for you, but you shouldn’t just assume that it isn’t.

The facts:

In August 2016: there were 1,456 new claims lodged.

In August 2017: there were 3,045 new claims lodged.

The increase is 109%.

Darren Sherborne is a solicitor in a niche legal practice in Cheltenham focussing on business law. He is a leading figure in employment law in the county, arbitrator for ACAS, contributor to national publications and a smallholder keeping pigs and poultry near Winchcombe.

Visit the Sherbornes website here.

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