The mere mention of the words ‘employment tribunal’ is enough to leave most entrepreneurs cold. Even if you ‘win’, it’s not unusual to spend £10,000 defending a claim. But your culture plays a massive part in avoiding disputes and ill-feeling.
Claims that can be brought against companies by employees that will be considered by a tribunal include: unfair dismissal, breach of contract, and discrimination to name but a few. But whatever the allegation, disputes often boil down to businesses not having a clear policy on dealing with difficult situations.
“Either employers don’t have proper procedures in place for handling discipline, grievances, attendance or capability issues, or if they do, they don’t adhere to them,” says Jane Bird, dispute resolution review programme manager at the Advisory, Conciliation and Arbitration Service (Acas).
There are a number of steps you can take to avoid disputes, and being clear about what your responsibilities are as an employer, and what is expected of your staff, is one of them.
Fair game
The breakdown of a relationship between a manager and an employee is usually triggered by the former’s handling of areas such as conduct, performance or absence. What causes this to escalate into a full-blown dispute is often a failure to address these issues promptly, consistently or fairly.
For example, a classic mistake many owner-managers make is failing to tackle issues, such as poor attendance, head on, then being too heavy handed when they do.
“It’s when an employee has been allowed to get away with poor conduct that the situation builds up and creates resentment among colleagues, who see that the problem isn’t being addressed,” continues Bird. “It gives the individual the impression that everything’s OK. Then when the employer reaches breaking point, they tend to over-react.”
Dealing with problems as and when they arise requires managers who are confident and competent enough to do so. “Simply having a procedure in place is not enough. You also need to train people in how that procedure is applied,” adds Bird. This also stops different management styles from creating inconsistencies in the way people are treated – a common source of grievances. You need a cohesive approach.
“It’s the ambiguity over what will happen in certain situations that ends up with people being treated differently for the same thing – sick pay being one example, warnings being another. That’s one of the key causes of disputes, because then people make up their own reasons for it – ‘it’s favouritism’, or ‘he’s got it in for me’,” says Maureen Lindberg, a Chartered Institute of Personnel and Development tutor in employment law.
Clear and simple contracts, staff handbooks and employment policies let everyone know where they stand.
“Proper regulation of your workforce invariably gets you brownie points in the employment tribunal, and can often give you the benefit of the doubt,” says Nic Hart, a lawyer at Davenport Lyons. “For example, an equal opportunities policy that isn’t simply left lying in a drawer, but is explained clearly to new employees during induction, will afford you a defence against a discrimination claim.”
The right approach
Doing things by the book is all well and good, but don’t lose sight of the people angle, warns Lindberg. She was the human resources (HR) director at Northern Rock at a time when the ailing bank was forced to cut 2,000 jobs, so she knows a thing or two about resolving disputes. After taking voluntary redundancy herself, she set up Professional People Management (PPM) with her Northern Rock HR boss Monique Ewart to advise entrepreneurs on people management.
“One thing that angers people more than most is too much focus on procedures, and an evident lack of desire to resolve the issue,” says Lindberg. “You are far more likely be taken to a tribunal if you take an adversarial approach. There’s a person involved here, a job, a livelihood. Treating people fairly should be the aim.”
One of the problems small businesses face, she feels, is that the advice they receive is focused on how not to break the law, rather than on how to resolve the issue.
“My gripe with people on the end of helplines, and in some cases solicitors, is they’ve never actually sacked or disciplined anyone in their life,” says Lindberg. “If your idea of resolving a dispute is making sure you never lose in an employment tribunal, then you will have to jump through so many hoops that you’ll lose the will to live before the end. It’s far better to address the problem practically, and try to get everyone to resolve the issue or leave with their head held high, then move on.”
You're fired
Tribunals often result from dismissals. Historically, the number of cases going to tribunal increases at a time of economic downturn, and according to Acas, we are beginning to see this happen again. When someone has just lost their job, they may feel they have nothing to lose by going to a tribunal, and for those of you facing the grim prospect of reducing headcounts, the most obvious type of claim you may face is for unfair dismissal.
However, if you’re looking at pay cuts, pay freezes or benefit reductions as an alternative to redundancy, you could also be looking at breach of contract claims. “In any dismissal, you’ve got to complete a two-piece jigsaw puzzle: a fair reason and a fair process,” says Hart.
Where redundancies are concerned, one of the most contentious issues involves who is selected, and one of the common pitfalls is not considering all those who perhaps should be. Other frequent mistakes include not consulting properly, not having the right criteria or scoring it fairly, and not considering or offering alternative employment.
It may be that you have a group of 10 salesmen, and you only want five. All 10 are then at risk of redundancy, and you need to select the five who will remain with the company by going through a fair process.
“What the tribunal would be looking for is a fair and non-discriminatory, transparent system,” says Bird. “One of the things a tribunal wouldn’t take kindly to is where subjectivity has entered into the decision-making process. ‘We didn’t get rid of this person because we think he’s a good bloke,’ will not go down well.”
However, a disciplinary record, timekeeping and skills are more unbiased and quantifiable. “Things like performance ratings over the past three years are very objective, especially as they would normally have been communicated in an appraisal, where the employee would have signed off on them,” says Ann Bevitt, head of employment at Morrison & Foerster.
Having an open and honest culture also plays a major role in avoiding disputes. If you want to change contract terms, for example, consult with a view to getting people’s agreement to the change, and try to get a majority agreement, advises Bevitt.
“The point is about openness, and being as fair as you can with the entire workforce during the restructuring process,” agrees Lindberg, who adds that employers should not be frightened to bring in an element of volunteering for redundancy. “If you’ve got two people who are doing the same job to pretty much the same standard, and one of them wants to go, let them go,” she says.