Recession hit firms face threat of more tribunal claims

Firms in Nottingham could face a huge rise in tribunal claims over the next few years because of the economic climate and new developments in employment law.

That’s the warning from a leading city law firm and follows the latest figures from the Tribunal Service which show that the number of claims rose by 43% last year to a record high of 189,303.

A third of those claims related to equal pay.

Stephen Luke, employment specialist at Andersons Solicitors in Nottingham, believes the situation could soon become even more difficult for employers who are already reeling because of the credit crunch. “We’re now seeing an increasing number of claims from employees made redundant because of the recession which could drive the tribunal figures even higher.

“Employees are more aware of their rights these days and prepared to pursue all sorts of claims relating to pay and conditions. For example, a group of former Revenue and Customs staff have just won a case in the House of Lords which ruled that they were entitled to accrue holiday pay while they were on long term sick leave.”

Stephen Luke said the new Equality Bill, which introduces stronger measures to tackle various forms of discrimination, could lead to a further rise in claims relating to age, disability and equal pay.

“Many of the claims will be genuine but there is also a danger of a victim culture emerging in which someone who doesn’t get their way in the workplace feels entitled to make a claim.

“Many employers may need to raise their game because such claims can prove expensive, especially if the employee’s complaint is not handled correctly.”

Stephen Luke is a Legal executive in the employment Department at Andersons Solicitors he can be contacted on 0115 988 6726 or by emailing: sluke@andersonssolicitors.co.uk

Avoid redundancies and still survive the recession

The recession is forcing many employers to consider redundancies – yet holding on to key workers could be vital if firms are to survive and take advantage of the upturn when it comes. Liam Kenealy examines some ways to avoid redundancies.

Staff wages are by far the biggest expense for most firms so reducing the number of employees can go a long way towards making the books balance as the recession deepens.

There can be a lot of downsides, however. Making staff redundant may not be as cost effective as it first appears once redundancy payments are taken into account. It can also be unsettling for the staff that remain and may even serve to de-motivate them. There is also the problem of the way it will be perceived by customers and suppliers who may start to have doubts about the viability of the business.

The procedure can also be time-consuming and employers must ensure that they follow the correct procedure to avoid any errors that could lead to costly claims before employment tribunals.

The best approach is to try to avoid the need for redundancies. Many firms have already reduced their use of temporary and agency workers. This can be a quick way to relieve some of the pressure but it is important to first check the contractual arrangements with the provider for notice periods and also to ensure there are no penalty clauses for early termination.

Stopping or reducing paid overtime is another tactic, as long as staff are not contractually entitled to a specified quota of extra hours. It may also be possible to go a step further and actually reduce the number of hours employees work. This would need the agreement of the employees concerned and although they may not like it, they may well be prepared to accept it if it helps to avoid the need for redundancies.

Some employees may even welcome a reduction in hours as long as it is a temporary measure. Working parents, for example, may like the idea of being able to spend more time with their children even if it does mean missing out financially for a while, especially with the school summer holidays coming up.

An extension of this approach would be to encourage staff to take sabbaticals.

Many employers are also looking at things such as reducing bonus payments, changing benefits or terms and conditions, and freezing salaries. All of these can be preferable to job cuts as long as they do not contravene any contractual obligations.

It is in the interests of both employers and employees to reach sensible agreements in these difficult times. That way the business will be able to hold on to valuable employees and those employees will be able to hold on to their jobs. Both sides will then be well placed to benefit once the economy starts to recover.

Liam is an employment solicitor at Andersons Solicitors he can be contacted on 0115 947 0641 or by emailing: lkenealy@andersonssolicitors.co.uk.

Spring brings a raft of changes in employment law

Increased holiday entitlement, more parents allowed to request flexible working and a new approach to resolving workplace disputes – just some of the changes to employment law now coming into effect. Liam Kenealy looks at the changes and examines what they mean for employers and employees.

The Spring has brought a raft of changes in employment law. One of the more controversial is the Government decision to press ahead with extending the right to request flexible working to parents of children up to the age of 16.

Until now, the right has only applied to parents of children under six or who are disabled.

It is estimated that up to 4.5 million parents will benefit from the change which came into effect on 6th April. However, it should be remembered that although firms must give proper consideration to requests for flexible working, they do not have to grant those requests.

Many business groups wanted the introduction of the extended rights to be postponed because of the economic downturn but the Government has decided to press ahead as planned.

Employment Relations Minister, Pat McFadden, said: "We took a second look at all areas of pending legislation because of the downturn, and decided it was still right to proceed because we want to help families cope with their responsibilities."

There is further good news for employees because the statutory holiday entitlement increased on 1st April from 4.8 weeks to 5.6 weeks meaning that an employee who works a five-day week is now entitled to 28 days annual leave. The entitlement includes bank holidays so the change will make no difference to employers who already give four weeks annual leave plus bank holidays. Those who do not, however, will need to make adjustments.

Part-time workers have the same holiday entitlement on a pro rata basis – that is, 5.6 times their normal working week.

Many employers will be relieved to hear that the statutory dismissal and disciplinary procedures have now been repealed.

They have been replaced by a new framework based on the provisions of the Employment Act 2008. Employers should now follow the guidelines in the new ACAS Code of Practice on discipline and grievance which came into effect on 6th April.

One of the main aims of the changes is to provide both employers and employees with greater flexibility. The mandatory three step process of letter, meeting and then right of appeal no longer applies. Instead, the ACAS code sets out the principles that employers and employees should follow to achieve a reasonable standard of behaviour.

Under the new system, a dismissal will no longer be considered automatically unfair due to a breach of procedure.

Instead, a tribunal will consider whether a failure to follow the code was unreasonable taking all the circumstances into account, such as the size of the business. A tribunal will still be able to rule that a dismissal was unfair for procedural reasons but it will also be able to adjust the level of compensation if it considers that the procedural failings had no material impact on the outcome.

Tribunals will also have the power to adjust awards by 25% if either side has failed to act reasonably or failed to comply with the code of practice.

Tribunals will also be able to award compensation for financial loss in certain cases, for example, where an employee is making a claim in relation to deductions from wages or redundancy payments.

Whether the changes bring the expected benefits remains to be seen but in the short term there is a danger that they may cause some confusion. Employers may wish to revise their codes of practice and they should certainly seek legal advice before taking any action in relation to their employees, especially as the maximum awards that can be made by employment tribunals rose on 1st February in line with the increase in the retail price index.

The limit on the amount of compensatory award for unfair dismissal increased from £63,000 to £66,200. The maximum amount of a nominal week’s pay – the amount used for calculating various awards including redundancy payments – increased from £330 to £350. The limit on the amount of guaranteed payment to an employee in respect of any particular day rose from £20.40 to £21.50.

The increases are made under the Employment Rights (Increase of Limits) Order 2008 and are in line with the rise in the Retail Price Index between September 2007 and September 2008.

Liam is an employment solicitor at Andersons Solicitors. He can be contacted on 0115 947 0641 or by emailing lkenealy@andersonssolicitors.co.uk