Redundancies 'not the answer'

With fears of an economic recession around the corner and employment tribunals on the rise, consultancy Croner 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 42 per cent rise in claims over the last 12 months. Croner has seen a 50 per cent rise in the claims it handles on behalf of employers over the last three months.

Richard Smith, head of litigation at Croner, said: “What we have seen over the last 12 months and certainly in the last three is a sharp rise in employment tribunal claims which is a direct result of the credit crunch.

“Economically 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 they’re often unaware of the procedures involved in dismissing someone fairly they are not only paying out the costs of making staff redundant, they’re also faced with litigation costs and tribunal awards.

“It 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.

“It 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 organisation’s cost reductions.”

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