Redundancy not the end to employers problems, warns Croner

With fears of an economic recession around the corner and employment tribunals on the rise, Croner, the UKís leading workplace information and consultancy providers, is warning employers that redundancy is not the easy solution that they seek.

Employers looking to cut costs by making staff redundant are now finding that instead of the financial gain they envisaged, they are in fact facing greater financial pressures from claims raised against them by disgruntled employees at tribunals.

For many employers it may be the first time that they have considered making staff redundant. There is therefore the risk that those facing this difficult decision for the first time will be unaware that they have to follow fair redundancy procedures to avoid unfair dismissal claims being brought by employees - a fact which is mirrored by the dramatic rise in employment tribunals.

Newly released figures by the UK Tribunals Service highlights a forty two per cent rise in claims over the last twelve months[1]. Croner, part of Wolters Kluwer UK, has seen a fifty per cent rise in the claims it handles on behalf of employers over the last three months.

Richard Smith, head of litigation at Croner, says: ìWhat we have seen over the last twelve months and certainly in the last three is a sharp rise in employment tribunal claims which is a direct result of the credit crunch.

ìEconomically this is a dark time for UK businesses and employers are increasingly looking at ways in which to preserve their long-term future. Many believe that the only way to do this is to make employees redundant. However, because theyíre often unaware of the procedures involved in dismissing someone fairly they are not only paying out the costs of making staff redundant, theyíre also faced with litigation costs and tribunal awards.

ìIt is vital that they manage that process correctly and seek professional advice before making staff redundant. We advise all our clients that they have to handle dismissals fairly as the law reflects that. We carefully guide them on what their legal responsibilities are and how they should handle the redundancy process.

ìIt is difficult, particularly for smaller businesses, to put in place and execute plans quickly for these challenging times. In the current environment, they need to equip themselves with a different toolkit to tread the fine line between treating your employees fairly, avoiding tribunals and at the same time contributing to the organisationís cost reductions.î

[1] The ET received 189,300 claims, 42% higher than expected. This was mainly due to the receipt of high volume multiple claims. These types of claim remain in the system much longer than other types of claims and subsequently contributed to a 73% increase in thenumber of outstanding cases from 138,200 in April 2007 to 239,300 in March 2008. Source: www.tribunals.gov.uk