Navigating employment tribunals as an SME

Navigating employment tribunals as an SME

By Andy Shettle, Chief Product Officer of ER Tracker
17 July 2019

Early last year the Supreme Court ruled that employment tribunal fees were unlawful and prevented access to justice. This meant that employees would no longer need to pay a fee in order to make an employment tribunal claim. Additionally it was ruled that the government would refund all claimants who had previously paid the fee – amounting to £27m for cases around unfair dismissal. 

In light of the new ruling, the Ministry of Justice has recently released figures which show that the number of single claims lodged at employment tribunals increased by a remarkable 90 per cent between October to December 2017, when compared to the same quarter in 2016. For most, removing the cost has come as a great relief, as now there is no barrier to submitting a claim if employees feel they’ve been treated unfairly at work. However, for employers and particularly SMEs there is still some cause for concern and a need for increased awareness around the risks when dismissing individuals. 

The changing employment landscape

We’ve seen the employment landscape change dramatically over the past year and the use of the gig economy is still an unknown entity in terms of employment rights. More recently, a dispute between Pimlico Plumbers and one of its former engineers went to the Supreme Court over the entitlements of the ‘casual worker’. The employee won in a landmark case for the gig economy and the decision has the potential to impact the rights of many people classified as independent contractors across the UK, including those at gig economy firms such as Uber and Deliveroo. Additionally it’s important to point out that freelance workers now account for 15 per cent of the UK workforce and The Office of National Statistics suggests it’s a trend which is set to grow. 

For many small businesses, seasonal and part-time workers are a resourceful asset which affords a good way to remain agile, whilst quickly expanding the workforce to meet demand. With recent pressure on organisations to replace zero-hour contracts, we’re seeing a shift towards the use of employment contracts. The move provides ‘casual workers’ with an employee status and an entitlement to claim for unfair dismissal, redundancy payments, maternity pay and leave. With this in mind many small to medium sized businesses will need to ensure that employee relations cases are well documented, managed effectively and policies adhered to. 

The removal of the tribunal fee does make it easier for claims to be made and SMEs can often find the process cripplingly expensive and prolonged – especially when the claim is deemed frivolous. Ultimately employers will need to be mindful of the decisions they make and prepared for the fact that those which prove unpopular could result in legal action. 

Developing a culture of conversation

In an ideal world, employment issues should be managed internally or through the ACAS Early Conciliation process, but in some cases employment tribunals are the only remaining medium in which to resolve matters. But it can be expensive, The British Chamber of Commerce estimates that UK businesses face bills of up to £8,500 defending themselves against employment tribunals. While many smaller businesses aren’t afforded the luxury of a HR team focused on claim prevention there are ways to avoid costly employment cases. 

For instance, employment contracts and policies are vital documents and it’s important that there is no ambiguity over aspects such as working hours, notice periods, disciplinary and grievance procedures. Having all this information readily to hand ensures that SMEs are clued up on the correct procedures, which minimises the risk of employees successfully challenging actions such as dismissal. Preparing for a tribunal can be extremely time-consuming and is likely to have a large impact on small to medium sized businesses, so it’s important to regularly review employment policies and keep them centrally stored.

Typically, HR functions in organisations consist of a multitude of spreadsheets and documents. Introducing an online HR system is a good way to track employee relations cases and incorporate policies and procedures. This allows the users to track and monitor time frames ensuring that they’re observed and met. This could in some cases, even reduce the risk of going to an employment tribunal in the first place. Regardless though, it will put a process in place to make it less likely and install a culture to follow HR procedures. 

Developing a culture of conversation is of the upmost importance for SMEs, it’s somewhat of a first line defence and a tool which can be used to combat complaints. If employees feel that they can raise concerns without the fear of reprisals, then managers are able to mediate the situation before it escalates into a formal complaint. In the case of employee relations prevention is certainly better than a cure.  


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