Staff Matters

While official figures show unemployment figures continuing to rise, information from our helpline services may be a positive indicator that the number of redundancies is starting to level out. It is possible that the reason why the numbers of calls on redundancy has decreased slightly is that employers now feel more experienced in handling redundancies, as they have already carried out some redundancy dismissals and may feel that it is no longer necessary to call for assistance. Employers should, however, still be cautious and take legal advice before dismissing any employee by reason of redundancy. The same goes for dismissals for other reasons, such as poor performance, as Employment Tribunal claims are on the increase.

Employment tribunal claims increase

Our litigation team, which deals with employment tribunal claims, has seen a 100 per cent increase in the number of calls from employers requesting help from the tribunal representation service in the past year. Not only has the number of claims increased, but there is also the potential that the tribunals will award higher levels of compensation than in the past, as a result of higher unemployment figures and successful claimants’ diminishing chances of finding work. For example, 12 months ago a 54-year-old delivery driver, found to have been dismissed unfairly, might have been awarded £3,000. Looking at that same case today, a tribunal may award a much higher sum to compensate for the driver’s future losses of wages as a result of a lack of future employment opportunities.

In this climate, employers need to follow well-recognised, fair procedures and not take some of the short cuts they might have done previously. In the past, if an employee were to be made redundant and knew that there was a strong possibility of being able to secure a new job on a similar salary, he or she would have just walked away after the redundancy procedure ended. This may even have been the case if a fair redundancy procedure was not strictly followed. Now, however, with fewer job prospects on the horizon, employees are taking legal advice early on in the redundancy procedure, and keeping a watchful eye on whether the employer is acting fairly.

Employees are also likely to be proactive in asking for alternative work within their existing organisation. If this request cannot be met, and they are dismissed, they are more likely than ever to consider making an employment tribunal claim to make up for that shortfall in salary.

Errors in the redundancy dismissal process leave employers vulnerable to tribunal cases and increased tribunal awards, if they lose their cases. Employers must adopt a consistent and transparent approach when selecting employees for redundancy.

Wage costs

On October 1, the National Minimum Wage (NMW) increased, as did the weekly pay limit that affects statutory redundancy pay.

The NMW rises by 7p to £5.80 an hour for adult workers (those aged 22 and older). The rate for 18 to 21-year-olds increases to £4.83 from £4.77 and the minimum wage for 16 to 17-year-olds goes up by 4p to £3.57 an hour. Although these may seem relatively small increases, employers are now at risk of immediate penalties if they make a mistake and fail to pay the correct rate. The fine is 50 per cent of the underpayment due to the workers, subject to a minimum of £100 and a maximum of £5,000.

The weekly pay limit that is used to calculate statutory redundancy pay goes up from £350 to £380 a week. This same calculation is also used as a basis for Employment Tribunal awards, such as the basic award in an unfair dismissal claim, so awards will increase too.

This is yet another reason why dismissals can be a costly business for employers and why taking the appropriate advice is important.