November 30, 2010
The recent employment tribunal appeal case of Tao Herbs amp; Acupuncture Ltd v Jin [2010], should be a warning to employers of the potentially devastating cost of being found liable for unfair dismissal.
In this case, the former employee was granted such a large amount that the employer’s business was under threat of going into liquidation. It was stated that the tribunal should “not pay attention to the ability of the employer to pay”, when assessing the amount of an award but look only to what is just and equitable with regard to the loss suffered by the employee. The maximum that can currently be awarded is £63,500 plus a small basis amount based on age and length of service.
If an employer is faced with a tough claim that could potentially render them insolvent, the best option may well be to settle the case with the employee before it goes to a tribunal, as this option may provide more scope for arrangements such as payment by instalments.
Employers finding themselves in the unpleasant position of having to consider redundancies at some point in the not too distant future may however, be relieved to hear that the Government is considering plans to extend the qualifying length of service that employers must have before they can bring an unfair dismissal claim, from twelve months to twenty four months.
This is not to say that the correct procedures can be sidestepped or compromised in any way. Any reforms are likely to take some time before they come into force and even if unfair dismissal cannot be claimed, an employer could be faced with an alternative action brought by a recent employee, perhaps for wrongful dismissal, unlawful discrimination or a breach of health and safety law.
Legal advice should always be sought if an employer has any doubt over redundancy or dismissal procedures.
