Increasing uncertainty around litigation
Pre-pandemic, the prospect of litigation meant that an employee would likely want to settle. However, the pandemic has changed this over time. Things are taking much longer to process and yet individual claims are up year on year by 13 per cent. The effect of the pandemic means that tribunals were hearing 40 per cent fewer final hearings. The system is becoming overloaded and whilst tribunal staff are working frantically to clear the system, the busiest in the country had to be shut because it was not a Covid-secure workplace.
Even now, cases filed in January are not being sent out to employers that were filed months ago. For the individual, the delay is terrible with the associated stress it brings. It is also problematic for organisations – from an evidentiary point of view, it is hard to retrace steps and elicit accurate witness statements when such a window of time has passed and recollections vary. Ultimately, the threat of litigation further down the line is not good for business planning and certainty.
Implementing (and budgeting for) difficult decisions in tough times
Basic principles of compensation are tricky. In the UK there is a dual system of employment protection rights. The contract of employment and the statutory compensation regime operate side by side. How the two interact is subtle. A clause specifying a payment in lieu of an individual’s notice period makes it more straightforward for all parties. With a three month or shorter notice period, having an argument about mitigation can be unproductive. Unless the market is particularly buoyant, it is worth negotiating when six months or more notice periods operate.
When individuals Google the sums they may be entitled to, they often receive inflated, top-end predictions. However, the calculation will be based on what is just and equitable. Statutory compensation sits alongside the individual contract. If compensating someone for infringing statutory employment rights, certain sums are earmarked for certain things. Injury to feelings can attract awards of between £5,000 - £30,000. Once again, mitigation is central to this, often hinging on how quickly the individual can find another job. The tribunal examines what has been lost between the date the individual lost their job and the hearing.
Factors affecting compensation
When negotiating the compensation, how long the individual is going to be out of work overall influences the awards tribunals are making. For example, when examining the average award for unfair dismissal, the average award is around £11,000. The maximum they could receive is up to one year’s salary or £80,000 – whichever is the lower figure. The real-time awards are nowhere near the maximum figures. Similarly, for racial discrimination, these claims are uncapped, but the average award is just under £10,000. Where the loss is of a sufficient long-term financial threat, for example involving age discrimination where the individual may be towards the end of their career, awards are generally highest.
Compensation is affected by length of service. Someone is not entitled to claim unfair dismissal if they have less than two years of service. However, discrimination rights are from day one. This is because they look at the seriousness of the act against an individual, not the length of their time there. In practice, length of service is factored into Employment Tribunal decisions but generally, individuals should receive a week’s pay for every year of service.
Managing employee turnover
