Most expensive mistakes with employment

The road to employment tribunals is paved with good intentions.  Nobody sets out saying “I want to be really horrible to my staff”.  But making the wrong call or allowing damaging behaviour to go unchecked can prove mightily expensive.  The average compensation awarded at an employment tribunal now stands at £12,148, plus the average cost of defending for the employer is £8,500.  This brings the average cost of a tribunal to £20,648 for employers. It can be significantly higher if there’s an element of discrimination.  Plus there’s the copious amounts of management time spent putting the details of a defence together.

Much of this outlay is entirely preventable.  The right interventions, a proper understanding of procedure and the ability to nip trouble in the bud can be invaluable.  Here are the most common legal mistakes in UK workplaces – and how to stay out of the dock by eradicating them!

1       Overlooking employment contracts

One simple thing employers must get right is to issue a written statement of terms and conditions within 2 months of someone starting work.  If an employee later makes a successful claim, there will be a mandatory award for not providing this which can be as much as a month’s pay.

A contract of employment is typically the first point of reference in a tribunal, and if it’s out-of-date or there are clumsy omissions, this could result in a higher compensation award. Update the terms in writing when there’s a pay rise or work arrangements change, otherwise this could dent your credibility at a tribunal.

 2       Avoiding difficult conversations about performance

Managers often fail to give employees the message early enough that their performance in the job is below the standard required.  Don’t leave it until breaking point, when you’re likely to over-react.

Not having those difficult conversations, or not making them clear enough, is likely to damage any defence against a claim.  Don’t be ambiguous or subtle.  Say enough so that the employee fully understands, back it up with clear examples and make it relevant to the job. Not clearly articulating and documenting your concerns is a short cut to a legal quagmire.  

3       Making assumptions about maternity

So many high profile tribunal cases involve pregnancy that with redundancy selection, there’s a tendency to over-compensate – landing the employer quite unintentionally in hot water! 

For example in one case where a male solicitor was selected for redundancy instead of his female colleague on maternity leave, damages of £123,000 were awarded to the male solicitor.  It was found that the selection decision was swayed by the woman receiving artificially inflated ratings in one aspect of the firm’s redundancy points system.

4       Overlooking harassment

Harassment cases can be costly for employers: not just financial damage, reputation really takes a battering.  When managers tolerate a culture of sexist or racist behaviour, there are potential consequences.  Employers often take the side of the “heavy hitter” when there’s a complaint, or apply a light touch and fail to get to the nub of the issue.  That means they don’t address complaints properly.

One example is a recent case where a banker nicknamed “Crazy Miss Cokehead” by male colleagues was awarded £3.2 million for sexual harassment. Her manager had not only tolerated gender-based harassment from her workmates, he had also sent her offensive emails and ignored her complaints.

5       Brushing off banter

Discrimination claims typically attract the highest compensation payments, often a six figure sum, and workplace comments and nicknames made apparently in jest can be used as evidence.

You’ll remember the “Gramps” case last year where workplace banter came back to bite?  In this case workmates had referred to an employee close to retirement as “Gramps”, which suggested that ageist attitudes were tolerated in the workplace. His manager told the tribunal he hadn’t seen a problem with it if everyone was getting on.  When he was selected for redundancy, this supported his claim for age discrimination and he was awarded £63,000.

It can seem harsh to quash workplace banter.  But sometimes you have to as manager.  It’s a manager’s role to set, monitor and enforce standards and this includes nipping banter in the bud.

6       Car-crash consultation

Not consulting properly with employees during redundancy negotiations or after a TUPE transfer has the potential to be one of the costliest errors you can make in the workplace.

If you make people redundant without consulting at all, or not for long enough, everyone affected (not just those in the redundancy or transfer pool) can make a claim.  Where there's no redundancy consultation,  the tribunal can make a protective award that entitles the employees to pay for up to 90 days, plus  notice pay and any statutory redundancy pay.

In TUPE transfer negotiations, it’s a commercial exercise and it can be a challenge to allow enough time for electing and consulting with employee reps. Allowing enough time for consultation could save a great deal in the long run:  TUPE law provides for a maximum award of 13 weeks’ pay if it’s not done.

 7       Not considering all the evidence

Things often go awry during the disciplinary process, especially at the investigation stage.  The person investigating possible misconduct should restrict the research to setting out the facts and a conclusion, keeping an open mind.  It’s better, where possible, to have a separate person decide on follow-up action. 

It’s also important to consider all the evidence available and take account of the employee’s explanation.  In a recent case where a bus driver was dismissed after testing positive for cocaine via a saliva test, the claimant was able to show via a follicle test that he was clear and that the cocaine had been transmitted from contaminated bank notes.  This line of reasonable defence was not followed up, and the bus driver won his unfair dismissal case with an £84,000 award.

 8       Not following the ACAS Code of Practice

Getting the disciplinary process wrong is an issue that crops up again and again in unfair dismissal claims.  By wrong, we mean that employment tribunals take into account whether managers in charge of the process have followed the ACAS Code of Practice.  Not following simple processes – such as not warning the employee beforehand of the possible consequences of disciplinary action so they can defend an allegation properly - can provide ammunition for legal action.

In a recent case against ASOS, one of its employees was dismissed for abusing the staff discount policy by processing her own refunds. A tribunal found that she had not been made aware that she was contravening any policy, nor had she previously been challenged, so she had continued to act on the understanding that processing her own refunds was acceptable.  Because ASOS had breached the ACAS code, her award for unfair dismissal was increased by 10%.

Be aware of the key points of the ACAS Code, such as the employee’s right to be accompanied and to see the evidence against them.   It won’t eliminate the risk of a tribunal altogether but it could reduce the size of the legal bill and potential award.

It’s not making a difficult assessment on complex legislation that will trip you up, it’s the day-to-day stuff.  We give pragmatic, practical advice about what’s important when you’re managing, and how to stay out of the employment tribunal.  Contact us at The Human Resource for a no-obligation consultation to overhaul your processes, or for advice on a nagging employee difficulty.