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Why it pays to get employment law right

Receiving an employment tribunal claim from an unhappy member of staff is one of the most unnerving prospects for any employer. In this article, we look at the risks to your business and what you can do to avoid them.

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Receiving an employment tribunal claim from an unhappy member of staff is one of the most unnerving prospects for any employer – especially when you consider that the average tribunal will cost you upwards of £4,000! And it's not just monetary costs that could affect you. In this article, we look at the risks to your business and what you can do to avoid them. The average cost of going to tribunal The most recent figures from the Department for Business, Innovation & Skills (BIS) put the average cost of defending a claim at tribunal at £4,000, whilst other estimates run up to £8,500. And even if you successfully defend against the claim, you'll almost always have to pay your own legal costs. In either scenario, the cost is too much for many small businesses and, what's more, entirely unnecessary as, in many cases, tribunal claims can be avoided. By carrying out your HR and employment practices within the law and taking advice at the right time, you can avoid these costs and fines. However, it's not just fines that can result from an employment tribunal. "Burdensome and impractical" recommendations As well as ordering you to pay monetary compensation, tribunal judgements can include requiring you to give an employee their job back, or reinstate them in another job. They can also make very specific recommendations which require you to change your processes and policies, to avoid any employment law breaches in the future. This can have a detrimental and costly impact on your business. For example, a school was recently deemed to have discriminated against an employee because of her age. In addition to awarding the claimant compensation, the tribunal told the school it had to have its equality policies and procedures reviewed and implement an equality and diversity training programme to include everyone in the organisation. When they appealed, saying that the recommendations were "burdensome and impractical", this was rejected. Damage and disruption Employment tribunals are carried out in open court, so they can be reported on by the press. And whether your tribunal judgement is featured in the local newspaper, a trade journal or just by word of mouth – even if it's successfully defended – there will inevitably be a cost to the reputation of your business. Plus, going through a tribunal is a disruptive process that takes you away from running your business. You or the claimant may also want to call witnesses, including other members of staff, causing added disruption to other employees. Avoid tribunals Take advice The best way to avoid attracting employment tribunal claims is to prevent employment disputes occurring in the first place by treating employees fairly and operating within the law. The good news is that the majority of mistakes in employment law could be avoided, if the employer in question took legal advice before taking action. We encourage all members of the Forum to contact us prior to taking any action, even if they're sure the law is on their side. Prevention is often better, cheaper and less stressful than the 'cure' dished out by a tribunal. Plus, there are also other non-tribunal-related benefits to getting your employment law right, including happier, more productive staff and reduced staff turnover, which have a direct impact on your bottom line. Know your risks It is important that you understand areas where you are at risk, so you can be vigilant for any threats. The most common employment tribunal claims in 2009/10 concerned working hours, unauthorised deduction of wages, unfair dismissal, breach of contract and equal pay. Plus, discrimination claims are expected to rise under equality legislation introduced in the last 12 months. Stay up to date with employment law You should also make sure that you stay up to date with any changes in employment law, which usually tend to happen in April and October every year. Advanced members and Practical Employer subscribers can do this by checking the Employment Guide online – which is updated whenever the law changes – plus we often publish upcoming changes to in our weekly email newsletters. Give mediation a chance And finally, it's worth noting at this point that tribunals are not the only route for resolving disputes. Mediation, where an impartial third party is brought in to help those involved in the dispute resolve their differences, are also options. Research by Acas in 2008 found that only 7% of businesses used mediation, with many thinking it was a ‘last resort', but it can be a more cost-effective approach than defending a tribunal case, even if you think you are in the right. If you'd like to talk through an employment law issue, or find out more about legal expenses insurance, call our member helpline on 0845 130 1722 (non-members call 0845 612 6266).

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