Employment Tribunals are currently being inundated with claims and ACAS are also dealing with a larger number of enquiries leading to them having to boost their call centre facility.
Premier Direct Insurance specialists have recently conducted a survey which reveals small business owners are too afraid to make redundancies for fear of being sued.
With limits on awards for unfair dismissal and redundancy payments increasing earlier this year, businesses fear the potential financial consequences of redundancies. In addition, around two thirds of company bosses (64%) think staff would be out for revenge and over half (55%) suspect they would attempt to get a bigger compensation payout.
Of the business owners worried about being sued by workers, 73% said it's because the business does not have the necessary funds to afford a payout and over a third (36%) would be worried they hadn't followed the correct procedures.
As a prime example of the consequences of unfair procedures Plymouth Employment Tribunal recently awarded a massive £366,773 to a group of workers who following an agreement between Shanahan and Alstom made a change to the working schedule and 46 men were made redundant with immediate effect on 1 May 2008.
Under employment law, where more than 20 employees are made redundant, workers must be consulted at least 30 days in advance. Shanahan Engineering told the Tribunal that the change to the working schedule was so sudden they had no choice but to lay off the staff straightaway.
The Tribunal found that Shanahan should have consulted its staff despite the short notice and said the failure to consult at all was unacceptable. It ordered the firm to pay the maximum award of 90 days' pay, amounting to £366,773 shared between the Unite members.
Worryingly, over a third (37%) of small businesses that have had to let staff go did not seek legal or HR advice beforehand, leaving themselves open to potential claims.
Employers facing possible redundancies should seek professional advice before issuing notice.
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