Friday 17th October 2008 – Businesses in the UK, fighting the current economic downturn, have put redundancies on the agenda. In the three months to August 2008, the ONS Labour Force Survey recorded 147,000 redundancies, a 24% increase on the previous quarter.* But with cases brought to employment tribunals on the rise too, businesses should take care to follow the correct procedures; making sure, now more than ever, they have the correct level of commercial cover in place should disgruntled employees choose to pursue claims against them.
"Redundancy cannot happen from one day to the next" says Steve Davis, Chief Broking Officer of Coverzones, the online small business insurance comparison website. Failure to correctly plan and manage the redundancy process will only serve to increase the risk of costly and time consuming proceedings. "Businesses which do not apply due diligence run the highest risk of claims", continues Davis.
With utility bills soaring and the credit drought ongoing, UK businesses are being placed under increased strain. As banks and businesses seek to tighten their belts, unemployment has become a hot topic, both in the workplace and the recent press; with unemployment figures from the ONS released earlier this week confirming the trend.**
Businesses should acquire a solid understanding of the legal requirements should they seek to pursue the redundancy avenue. Redundancy means a change in business needs resulting in no further need for a particular role. If alternative jobs are available, and those at risk have the appropriate skills to occupy those vacancies, then they must first be offered the positions. Knee jerk reactions by businesses to recruit new staff will antagonise those being made redundant and be severely scrutinised during legal proceedings.
Tough economic conditions have also made it hard to get a new job. Figures available from the ONS show small businesses of 1 to 9 people particularly hard hit, with a provisional estimate of 26% less jobs in the sector for the three months to August 2008, compared with the same period in 2007.*** This ongoing trend may serve to make those redundant more aggressive in pursuing their rights, exhausting all avenues in a bid to survive.
Cases brought to employment tribunals, the ‘industrial courts’ which exist to deal with employee grievances against their employers, rose by 15% during the course of 06-07.**** As many employment rights are contained in statute law, they can only be enforced by employment tribunals. Unfair dismissal, wage reductions, breach of contract and redundancy pay claims are amongst the grievances brought to employment tribunals by disgruntled employees. The trend observed in recent years may well continue rising with job cut threats a reality across multiple industries.
Making sure a business has the correct level of commercial cover in place is down to each individual company. "Increasingly litigious times make it all the more apparent that getting the right level of cover is vital, for carrying the burden of legal costs could very well break already fragile businesses", concludes Davis of Coverzones.
For more information on business insurance or to apply for a small business insurance quote online please go to: - www.coverzones.com
*Source: Office of National Statistics, Labour Market Statistics released 15th October 2008.
**Unemployment figures released on 15th October 2008 by the Office of National Statistics reveal an additional 164,000 more people out of work over the three month period to August 08 from previous quarter.
***Source: Office of National Statistics. Link: Vacancy survey NSA latest data. http://www.statistics.gov.uk/statbase/Product.asp?vlnk=9390
****Source: The Tribunals Service. Reported September 2007.
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