Partner Article

Learning the right way to dismiss employees

Michael Slade, Managing Director of employment law specialist Bibby Consulting & Support explains that even large corporates don’t always get it right.

Anyone who runs a business, whatever size and type, will know that there will be times when they have to let staff go. This could be down to the behaviour or performance of an employee, or where a company suffers a financial downturn, redundancies may be necessary.

Of course, employers will do all in their power to avoid situations like these, but when the time comes to take action, it is vital that it is done correctly, for legal reasons as well as for moral reasons.

Claims to employment tribunals are becoming increasingly common but it is in everyone’s interest to avoid them – tribunals should be the absolute last resort. They cost the company both time and money and they don’t help at all in creating good relations with the workforce. Last and by no means least, they do nothing to enhance a company’s reputation as being a
good place to work.

A recent case illustrates all too clearly the problems caused by a company failing to follow the correct legal procedures. Most people will know that the Woolworths chain of stores closed down in 2009. What they may not know is that redundancy notices were issued without following the correct legally proscribed consultation procedures. As a result, over 24,000 former employees have been awarded up to £67.8m in compensation.

It is a legal obligation for employers to consult collectively in a redundancy situation where the employer is proposing to make 20 or more staff redundant in a 90 day period. If they do not, an employment tribunal can award a penalty of up to 90 days’ pay for each employee affected, in this case, the tribunal awarded 60 days’ pay as compensation.

It is always essential to adhere to rules laid down in employment legislation when dismissing staff, irrespective of the reason. We always ask any of our clients who are considering sacking their employees or making them redundant to come to us for guidance as early as possible and before they take any action.

That way we can steer them through the process to ensure they follow established and sound procedures and avoid the legal pitfalls. Large, well established organisations like Woolworths don’t always get it right, so it’s imperative that small and medium enterprises (SMEs) seek expert guidance to avoid costly and embarrassing claims.

This was posted in Bdaily's Members' News section by Tom Keighley .