Employment Tribunals – protect your business

On the 6th of April this year, the Employment Tribunals (Constitution & Rules of Procedure) Amendment Regulations came into effect. One of the most significant changes within these regulations was the increase to the ‘Tribunal Costs Cap’, a limit which previously stood at £10,000.

The cap provides compensation to an employer where an employee loses a claim during a tribunal, or if it becomes clear that the employee has made a false or malicious allegation against the employer. Prior to 6th of April this year, the tribunal had the authority to award the employer up to a maximum of £10,000, but since April 2012 tribunals can now award the employer up to twice this amount – £20,000.

Good news for business owners you may think but according to the Telegraph, last year’s employment tribunals cost UK businesses over £1.6bn.

However, it is not always just the financial costs of tribunals that can be detrimental to a business; tribunals are time consuming and can affect the day to day functioning of your business. They can ruin business relationships; adversely affect employee morale and bring unwanted negative publicity. With the economy experiencing recession it is more vital than ever that businesses do all they can to avoid the possibility of tribunals; particularly small business where the consequences of a tribunal can be greater.

In 2010, the CIPD’s survey of employers’ experiences of managing workplace conflict confirmed that the scale of workplace conflict has increased in the recession. Almost half of those businesses interviewed said that their organisation had increased their use of disciplinary action (49.5%), grievance procedures (47.7%) and mediation (49.4%) in the last two years.

Apart from the obvious advice of acting earlier rather than later to avoid employment issues escalating, here are some ways of avoiding tribunals:

• Creating current, complete contracts of employment
• Making sure policies and procedures are up to date
• Ensuring that policies and procedures are followed absolutely ‘to the letter’
• Training of your staff in Conflict Management

The new, higher cap may of course act to deter some employees from taking issues to tribunal and as an employer you are well within your rights to bring the recent amendment to the attention of your employees. Of course if the threat of tribunal is impending or you fear it could affect your business at some point in the future, or you would simply like to review your current policies and procedures don’t hesitate to contact one of our friendly and professional HR Advisors.