In today’s business landscape, understanding how to avoid an employment tribunal is crucial for small business owners and managers.  This week’s bulletin is the first in a series of providing you with key advice on how to manage employee relations effectively and mitigate the risk of potential legal disputes.

Employment tribunals are judicial bodies that hear disputes between employers and employees regarding employment rights. Employment tribunals also deal with claims related to statutory rights, which protect employees from unfair treatment. It is crucial to follow a fair process when dismissing an employee to avoid potential legal claims.

Types of claims

Common claims include unfair dismissal, discrimination, unpaid wages, and breaches of contract. The Employment Rights Act outlines specific categories for fair dismissal and the legal rights employees and employers have in these situations.  A crucial factor in determining the fairness of a dismissal is whether the employer has acted reasonably in dismissing the employee and it’s important the employee has been treated in the same way as other employees in similar situations. Additionally, being a trade union member and participating in trade union activities qualifies as an ‘automatically unfair’ reason for dismissal.  Constructive dismissal occurs when an employee is effectively forced to resign due to the employer’s conduct, making their position untenable.

The importance of avoiding tribunals

  1. Legal fees: Going to tribunal often involves having legal representation, which can incur significant legal fees. These costs can add up, especially if the case involves legal teams or multiple hearings.
  2. Potential compensation payouts: According to the latest available government statistics the average award for an unfair dismissal case at a tribunal is £13,749. In extreme cases, payouts can reach up to £800,000 to £900,000, (although these are in quite unique situations). For sex discrimination claims, the highest reported award was just under a million pounds.
  3. Disruption and internal costs: Dealing with a tribunal creates a huge amount of work internally and a drain on management time.
  4. Business reputation: Any involvement in a tribunal can negatively affect how a business is perceived. It’s a public process and could signal poor HR practices or management issues to clients, partners, and future potential employees, potentially damaging the business’s standing in the industry.

Both the financial costs and potential reputational damage underscore the importance of good HR practices and thorough documentation to avoid reaching this stage in the first place.

Key reasons employers lose tribunal cases

Lack of documentation – It’s crucial to remember that “evidence wins tribunals.” Written, contemporaneous evidence in particular. It’s essential to maintain comprehensive records of all employee interactions. This means documenting everything from meetings and disciplinary actions to any important verbal discussions that have taken place.

  • Having well-organised and thorough documentation can greatly increase your chances of success if you ever find yourself facing an employment tribunal. It provides clear evidence of the procedures you’ve followed and demonstrates that you’ve acted fairly and reasonably.  Accurate documentation of all procedures and employee interactions is vital. It also helps in managing records efficiently, which is crucial for compliance and defending against potential legal challenges. Remember, the more evidence you have to back up your decisions, the stronger your position will be in any legal setting.

Failure to follow procedures – Staying on top of procedures for disciplinary actions and terminations is crucial for several reasons.

  • Fairness and consistency: Handling grievances and disciplinary actions consistently ensures that all employees are treated fairly, no matter their position within the company. This consistency helps in maintaining a fair workplace environment and reduces the risk of claims of unfair treatment.
  • Legal compliance: It’s important to follow the ACAS Code of Practice, which is key to ensuring that all disciplinary procedures comply with legal standards. Not following these can lead to legal repercussions and potential tribunal claims.
  • Resolution and communication: Establishing clear communication channels during any grievance or disciplinary process ensures that employees understand the issues, the process being followed, and the reasons for any actions taken against them. This can facilitate early resolution of disputes and prevent escalation.
  • Prevention of escalation: By addressing disciplinary issues promptly and effectively, organisations can often nip potential problems in the bud before they escalate into larger disputes that could lead to costly and time-consuming tribunals.

To make sure workplace policies are applied consistently across all employees and to help prevent claims of unfair treatment, it’s essential to have a robust strategy in place. Here are some tips to help:

  • Clear communication: Make sure that all employees are aware of the policies and procedures from day one. Make your Employee Handbook readily available – it should outline company policies, expectations, and procedures.
  • Regular training: Conduct regular training sessions or briefings to keep employees (and managers) updated on any changes in policies or new employment laws. This ensures everyone is aware and reduces misunderstandings.
  • Document everything: Accurate and thorough documentation is vital. Keep records of all communications, performance reviews, disciplinary actions, and grievance procedures. Lack of proper documentation can be a significant issue during tribunals.
  • Apply policies equally: Whether dealing with a new apprentice or the managing director, everyone should be treated according to the same set of rules. Maintain consistency to ensure fairness.
  • Prompt action: If an issue arises, address it quickly. Early intervention can prevent small problems from becoming major disputes.
  • Impartial decision-making: When it comes to handling grievances or disciplinary actions, ensure that an impartial manager handles the process. This helps maintain objectivity and fairness.
  • Use technology: Leverage HR software to manage employee data, document interactions, and keep records. This technology can streamline processes and ensure compliance with privacy laws.
  • Encourage open communication: Foster an environment where employees feel comfortable voicing their concerns without fear of unfair repercussions. Open dialogue is key to understanding issues before they escalate.

By following these tips, organisations can foster a fair and consistent workplace, as well as reduce the risk of potential claims of unfair treatment.

Extracted from ’Employment tribunals: How to avoid them’ – expert insights by Breathe Partner Dan Jenkins  (7 May 2025).

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