Fees of up to £1,250 were introduced in July 2013 by the government, but the Liberal Democrats are said to be unhappy about them following a major fall in the number of cases being brought before employment tribunals (ETs). The TUC described the fees as “a tax on justice”.
Whether fees go down or not, employers face more severe sanctions. In April last year the statutory limits on the level of compensation that employment tribunals are able to award went up. Tribunals were also given the power to impose financial penalties of up to £5,000 on employers, where it’s determined that the employer has breached worker’s rights and the breach has one or more aggravating factors.
An ET is generally a prospect that leaves employers with a sense of dread. But while larger organisations are likely to have experienced HR and legal teams to deal with the process, for many SMEs it can be the first time they have had to deal with a situation that can have significant cost and reputational implications.
Acting emotionally is the single most common mistake that small and medium-sized business owners make, according to Cathy Monaghan, head of HR at HR and benefits provider PES. “Claims are, and should be dealt with, factually and as a business decision so sometimes commercially it is better to settle a claim for a ‘hassle payment’ than the cost and time of dealing with a claim especially if the company has some ‘weaknesses’,” she said. “Lack of process – especially supported with appropriate documentation – is often an issue.”
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The main problem that Peter Holmes, an employment law consultant at Wirehouse Employer Services, finds with SMEs is a tendency to “put their head in the sand, ignore it, or forget about it” and only deal with it on the day of the hearing rather than prepare in advance and follow tribunal orders. The other problem is that some SMEs assume that the tribunal will believe them rather than the other side.
Holmes and his team usually find themselves involved in drafting letters and documents in order to avoid any claims in ETs. Should a claim be brought against a client, they will represent a client in tribunal, prepare the case and provide they follow the company’s advice, it will cover the cost of any awards.
“This can mean that we advise clients on holiday entitlement, sickness issues, grievances and disciplinary hearings, TUPE and redundancies to name a few,” he added.
Prior to the dismissal to advises SMEs to focus on “paperwork and procedure.” He explained: “They have to demonstrate to a judge six months after the event, the process used, the thought process taken and the reasons behind any action. Therefore letters inviting employees to meetings, minutes of meetings and detailed outcome letters are crucial. Without these, unlikely to successfully defend your claim.”
After receiving the claim, he advises managers or SME owners to respond in a timely manner. “Spending time on how you portray the company to the tribunal will count a lot,” said Holmes. “If you come across as unprofessional in paperwork to the tribunal, it will form part of the judge’s opinion of them. Prepare in advance, and collate all the paperwork into a bundle and draft a witness statement. The biggest piece of advice I can give is that they should seek advice from a professional. If the police charge you with an offence, one wouldn’t defend yourself, so why in a tribunal, when it could still result in an award against you of thousands of pounds?”
“If an employee or ex-employee wants to claim at an employment tribunal they must now first contact ACAS who will contact the employer or ex-employer to see if the claim can be settled as you can’t go straight to an ET anymore,” explained Cathy Monaghan. “My advice would be to engage with ACAS to understand the process, what is needed to find out what ACAS’s view is of the case is – they are independent so should give a balanced view and explain what an ET would look at. The other question is whether commercially it is better to settle.”
She also advises SMEs to review their people processes before they end up being taken to an ET.
NatWest Mentor offers advice and support to SMEs who find themselves dealing with tribunals. Criona Courtney, Head of Employment Law Advice & Litigation, emphasises the importance of preparation and taking advantage of such support.
“It’s vital that an SME understands tribunal procedures and that key facts and issues behind the case are properly identified,” she added. “While tribunals weren’t intended to be as formal as other court proceedings, they can become very legalistic. An employment judge presides over the case which may require the employer to provide evidence via witness statements and be cross-examined. Having a competent, qualified individual to present your case is an obvious asset.”
But she urged companies to ask whether it is worth contesting a claim in the first place. “While settling out of court is an obvious option, if an employer believes that they are not at fault and/or the claimant won’t budge from an unrealistically high expectation for settlement, then it can be worth fighting the case and if in doubt, seek advice.”
One company that did just that is Jhoots Pharmacy, a UK-wide SME with nearly 250 employees. A trainee working for the business was dismissed after a number of disciplinary issues, heralding a three-year battle in the tribunal courts.
Although the initial tribunal decision went against Jhoots, the verdict was overturned on appeal, with Mentor’s support, including a barrister appointed by them, providing key support. HR director San Jhooty commented: “It doesn’t matter how careful you are, sometimes people just slip through the net. You couldn’t fault any of our systems – all our contracts and procedures were in place and we’re renowned for keeping our house in order. For those three years of support throughout the case, we will always be grateful.”
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