Upward trends – increasing risks for employers

The annual report of the employment relations service, ACAS, published on 23 July 2009 (which provides a snapshot of the UK employment market) has confirmed what many employers thought – that there remains an upward trend in employment claims against employers:

• ACAS received over 78,000 conciliation cases from the Employment Tribunal Service – 18% more than the previous year

• The service also received 55,000 cases which involved a claim for unfair dismissal, a rise of almost 12,000 over the preceding year’s figures.

• ACAS’ Redundancy Helpline - which received around 10-15 thousand calls per week in 08/09 - saw a 100% increase in the proportion of calls requesting advice on redundancy.

 
This has to be read in light of the Employment Tribunal statistics for 2007/08 published by the Tribunals Service, which indicated that the number of tribunal claims had increased sharply by 43% since the previous year.

The figures published by the Tribunal Service reveal that:

• the number of tribunal claims has increased from 132,577 claims in 2006/07 to 189,303 claims in 2007/08;

• the rise principally occurred due to increases in the following types of cases: working time (increase 164 per cent), equal pay (increase 42 per cent) and trade union membership (increase 174 per cent);

• the most common type of claim was equal pay (62,706 claims), followed by working time  (55,712 claims), unfair dismissal (40,941 claims), unauthorised deductions from wages (34,583 claims), and sex discrimination (26,907 claims);

• the average award for an unfair dismissal claim was approximately £8000.

• of all unfair dismissal cases, 22.5% (8312 claims), were disposed of at a hearing.  Of these, the Claimant was successful in 45.6% of cases.

 
Underlying this trend are many factors, including that before the recession, laid-off workers would have been less likely to make a claim as they would have found it much easier to find work.

The awards made by employment tribunals are essentially split into two main elements – a basic award, which is calculated according to a formula, and a compensatory award which seeks to compensate an employee for loss.

If an individual obtains another job quickly and it pays as much as the old one did, making a claim might not be worthwhile as the compensatory element of the claim will be reduced by the new income.  However, in an economic downturn, individuals may take the view that it might be months or years until they get another job. They therefore anticipate substantial financial losses, which they might be able to recover through a claim.

It is therefore increasingly important that employers obtain guidance on disciplinary procedures and redundancy matters at an early stage.  Contact Mike Anderson to discuss matters further.