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Employment law minefield for small firms.

Byline: Fergal Dowling

The number of small firms struggling to understand increasingly complex employment law has rocketed. This is according to recent press reports and it is also reflected in the sharp rise in legal advice that I give to local firms and their employees.

The majority of queries revolve around new tribunal legislation, new parental leave entitlements and stakeholder pensions.

With small firms, in particular, owner managers have read about the changes in workplace law, but they have little idea about how such legislative changes apply to them.

Employers' concerns over redundancy also come to the fore. Many smaller businesses have struggled in the face of low interest rates and the manufacturing downturn.

The inevitable side effect is redundancies but employers are now extremely wary of the repercussions. The goalposts have been moved and they are unsure about whether they are playing by the rules.

They are right to be cautious. Take disciplinary cases as an example. Someone unfairly suspended from duties, but not sacked, can claim pretty well unlimited sums. Conversely, a person unjustly dismissed has a legal cap on the amount recoverable.

Furthermore, employees who leave before they receive an expected dismissal can sue for damages. Those who are sacked cannot. The intricacy and, sometimes, unpredictability of employment law continues in the courtroom. A series of recent cases is clearly at odds with each other and also contradict precedent.

In the first example, an ex-employee brought an action against computer company Unisys, which dismissed him without notice for allegedly negative conduct. Although the employment tribunal found the allegations unjustified and awarded the employee pounds 11,000 - the limit at the time for this type of case - this was claimed to be inadequate.

The employee then claimed he suffered a mental breakdown after the sacking which left him unable to work for some time. He wanted pounds 400,000 - promptly denied by the courts.

In complete contradiction, one of our leading Law Lords then went on to state that compensation for unfair dismissal should not just be for financial loss.

Tribunals should be more generous with employers' money in such instances. Sacking cases, so he said, should take into account distress, humiliation, damaged reputation and disturbed family life. In the current climate, applying that rule to unfair dismissal could prove expensive for companies. Almost every complainant could claim some form of distress following their forced departure from the workplace. This means no company can now forecast how much a dismissal might cost. It is now possible to see tribunal awards in excess of pounds 100,000. My advice to employers is with any human resource issue, make sure you are operating on the right side of the law. There is still an education job to be done by Government and the legal profession, but if you are in any doubt, take advice.

Fergal Dowling is a partner and employment law specialist at the Birmingham office of national law firm Irwin Mitchell.
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Publication:The Birmingham Post (England)
Date:Sep 1, 2001
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