Protect your business against compensation culture

Friday 26th June 2009

“Where there’s blame there’s a claim” is a phrase which is only too familiar to most businesses. Over the last few years the claims culture in the UK has steadily grown. Unfortunately for employers, not only has this phenomenon crossed the Atlantic but it has also spread its wings transgressing from personal injury claims to employment-related claims.

Figures published by the Employment Tribunal Service show the number of claims filed with the Employment Tribunal leapt by an astounding 43 per cent last year as compared to the previous year. As employment lawyers we too have really felt the sharp increase in the number of ‘have a go’ claims our clients are faced with, many of which we are sure would never have been pursued in a different economic climate.

Previously employees who were unhappy in the workplace might have simply found a new job, and those dismissed had good prospects of finding alternative employment elsewhere. This has all changed. Unhappy employees are well versed in how to raise grievances. And for those individuals who are dismissed, high unemployment levels and limited job vacancies mean that it is taking longer to find gainful employment.

With time on their hands, financial pressures and the lack of any deterrent, such as a fee to lodge a claim with an Employment Tribunal, dismissed individuals are beginning to think they have little to lose by filing a claim against their former employer.

Whilst the cost of filing a claim is minimal, the same cannot unfortunately be said about defending a claim. Defending a claim is time consuming, inconvenient and can cost a business dearly both financially and in relation to management time.

By following a few simple steps you can put measures in place to equip your business, so far as is possible, against employees bringing claims and successfully defending any claims you might find yourself faced with in the future. You should:

  • Investigate any grievances thoroughly, keep a paper trail of all investigations and ensure the aggrieved employee is aware of all the steps taken to try to resolve their grievance.
  • Deal with complaints made by any member of the workforce quickly and efficiently in order that employees feel you are taking their issue seriously and seeking to resolve it
  • Revisit your equal opportunities policy. Ensure it is up to date (an Employment Tribunal recently held that a claimant’s strong environmental beliefs amounted to a philosophical belief which was protected by discrimination laws) and remind employees of the importance of not discriminating against their colleagues on the grounds of any of the protected characteristics.
  • Ensure that investigations, disciplinary hearings and appeal hearings are all held by different members of the HR or management team.
  • Always keep minutes of any meetings and seek the employee’s agreement to their accuracy. Paper trails are essential when it comes to adducing evidence to defend a claim.
  • Follow the newly introduced ACAS Code of Practice when dismissing an employee (save if the dismissal falls within permitted exceptions like, for example, redundancy dismissals); and
  • When an employee is dismissed, set out clearly what payments (if any) they are entitled to and explain why such payments are payable and the reasons behind not making other payments.

By handling problems and complaints quickly and efficiently and in the case of dismissals, by seeking to ensure that employers part company with employees on the best terms possible, employers are more likely to avoid a claim.

Even if claims result despite the best efforts of employers, sometimes such claims can be shown to be unmeritorious, spurious or vexatious claim. In such cases, handled appropriately and with suitable tactics at an early stage, it is possible to persuade the Employment Tribunal to use its power to strike out such claims and even, in appropriate cases, to award costs.

The key is always to seek expert advice and to do so promptly. It is worth remembering that statistically, employees lose more often than they win, which may be contrary to the popular belief held by many a beleaguered employer.