A worrying rise in unfair dismissal claims

Figures recently released by the Tribunals Service show a 29% increase in the number of unfair dismissal claims brought against employers.  Why is this happening and is there anything else that you need to be aware of?

Rise in claims

According to new data for 2008/9 from the Tribunals Service, unfair dismissal claims are up 29% on 2007/8, with 52,711 claims being recorded as opposed to 40,941.  So, what’s caused this steep rise, and how are tribunals dealing with those employers who fail to get the law right?

Increase in redundancies

As you would expect, the economic downturn has resulted in the number of redundancies running at much higher levels than in previous years.  In fact, the Office of National Statistics says that there were 286,000 redundancies in the first quarter of 2009, as opposed to 111,000 for the same period in 2008.

Less work available

The knock-on effect of this situation is that fewer jobs are available; no longer can a redundant employee simply shrug their shoulders and walk straight into another job.  The reality is often long-term unemployment.  As a result, many feel they’ve little to lose by bringing a claim, and of course there’s always the possibility of some extra cash being offered just to go away.

Lack of fair process

Another factor that’s led to the increase is that many employers are dealing with mass redundancies for the first time.  This, combined with pressure to make cost savings, has led to some taking shortcuts and failing to follow a fair process.  For example, some less careful employers have made redundancies by text message, or by placing an ad in a newspaper!

Failure to inform and consult

The media has also had a part to play in this worrying trend.  It’s usually very quick to jump on this type of mistake, often overplaying reports of employers who ignore their legal duties.  This can create a false impression for employees who have been made redundant by employers who have correctly followed the law.

Tip.  Even if it seems like a pointless exercise, always consult with employees individually or collectively (depending on the numbers and timeframe) over any need for redundancies, e.g. via trade union or employee representatives.

Higher payouts

Finally, tribunals are being far more generous with compensation in unfair dismissal claims.  As there are fewer job opportunities, awards are increased to reflect this.  Instead of compensating claimants for a maximum of one year’s loss of salary following their dismissal (which used to be standard practice), tribunals are making this period longer; awards for 18 months and two years are not uncommon.

Tip.  Evidence shows that disgruntled employees are more likely to bring claims if they feel that the process is unfair.  So if you need to make redundancies, ensure that any process is fair and transparent, particularly with regards to how you have selected the redundancy pool.  Make staff aware of how the process will work with a clear redundancy policy. 

“Tips & Advice – Personnel”: 12.11.2009