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    When considering adding to staff numbers, most people’s thoughts are concentrated on the job they want carried out and the cost it will involve.

    Few take the thought process much further but that could prove an expensive mistake. The risks to every business are multiplied by the number of staff.

    Not only should employers be worried about an individual’s ability to do the job in hand without costing the company the company through consequent legal action by, say, a disgruntled customer, but they should also think about the danger of actions an employee might take deliberately.

    In these days of new technology it is extremely easy for an employee to ship sensitive information off to a rival firm and companies are equally at risk of fraud in some form.

    Christopher Flint, crisis management adviser for Special Contingency Risks, warns one of the greatest growth areas in crime is transport theft.

    “One of the types of crime increasingly being seen are lorry thefts and transport generally is vulnerable. Companies should be very much looking at employment screening,” he said.

    But some of the greatest risks in employment come from legal action against the company taken by the employee themselves. It is more and more worthwhile for employees to sue over alleged discrimination, over employment practices or over contracts.

    And as the UK becomes more litigious by nature, following the US example, more cases are being brought every year.

    Gary Freer, a partner and head of employment law at Barlow Lyde Gilbert, said they have seen the number of cases brought for unfair dismissal multiply dramatically since the government, two years ago, increased the amount of compensation from £12,000 ($17,000) to £51,700.

    He said that discrimination cases are also on the increase as people become more litigious and he said there have been some “alarmingly high” payouts into six or even seven figures.

    Mr Freer added that changes in the law to prevent discrimination against the disabled has also brought a raft of new cases.

    And Bernard Kingsley, employee relations manager for Manpower, an employment services business, said it was not just the severe disability that was causing concern.

    “Employers are, of course, obliged by law to encourage the provision of work for the disabled but there are cases where they may not be aware of a disability when taking on a new member of staff which then causes problems later,” he warned.

    “It is particularly the old school of ailments such as back pain and the disease of the late 20th century – stress – that is starting to be labelled a disability.”

    Mr Kingsley said employers needed to be “ultra-careful” in ensuring that they do not discriminate against such disabilities but he also warned that, ultimately, an employee could be off work for the foreseeable future with an injury such as back pain but be protected by disability legislation.

    The other concern for employers is that staff are not obliged to declare such problems when they are taken on and could put the employer into a difficult position later on when that staff member is asked to undertake a task that they are not fit enough to do.

    Mr Kinglsey has called for a “level playing field” which allows employers to be made aware of such concerns at the outset and therefore able to tailor the work appropriately.

    Mr Freer warned that if there is a downturn in the economy, employers are likely to see yet more discrimination cases.

    “If anything the situation will get worse in a downturn because more people will lose their job and take longer to find a new one and so claims will be larger because they are usually based on lost income.”

    But he said the next real threat is a change in European law which is expected to be adopted shortly after the general election in the UK. This would force companies with anything over 50 employees to establish works councils.

    These councils would have to be consulted on any matter affecting the structure of the business and Mr Freer is concerned that any non-compliance, in the eyes of the employee, would be grounds for a lawsuit.

    He predicts that some of these measures will fly in the face of existing stock exchange regulations which require the market to be made aware of any changes first.

    Mr Freer warned: “It is bound to generate lots of claims as these questions get answered.”

    His other major concern is the raft of data protection legislation. For example, he is worried by the data protection code of practice, which is currently being re-drafted after the previous version was found to contradict some elements of the recent Human Rights Act.

    These recent legal manoeuvres also worry Mr Kingsley who said that the whole issue of holding records and information on staff is becoming very complicated.

    He said there are other concerns about the monitoring of staff telephones or e-mails, courtesy of the Lawful Business Protection Act and he also predicts some impact from the Human Rights Act.

    “Generally speaking the growth of employment legislation in the last few years is immense and it is becoming more complicated.

    “And it is likely to be continuing after the election. The trend is definitely for more laws and more complications for employers,” he said.

    Mr Kingsley said his role is very much one of risk reduction, of either trying to limit damage that has already been done and settle cases as quickly as possible.

    But the company is also heavily involved in training and risk reduction, educating employers in the risks that they face and the changing nature of those risks so that companies are less exposed to litigation.

    “Insurance Day” 5 June 2001