Employment Law and HR Practice Fact Sheet

Getting HR practices and employment law wrong can lead to significant financial and reputational damage for employers.

This fact sheet provides a quick reference to the latest costs associated with employment tribunal claims and poor HR practices in the UK.

Employment Tribunal Statistics from 1 April 2022 to 31 March 2023.

Although there is a cap on unfair dismissal awards, this can be exceeded where the reason for dismissal is whistleblowing or raising certain Health and Safety concerns. These awards of course do not include the legal fees associated with defending a claim or the management time involved. It can also take between 8 months and 18 months for a claim to be resolved by the Tribunal.

Common Types of Claims:

• Unfair Dismissal

• Wages Claims

• Discrimination Claims: (with sex and disability discrimination being the most common) Other Impacts of Poor HR Practices Recruitment & Retention Issues

• Cost of Replacing an Employee: 6-9 months’ salary on average.

• High Turnover Rate: Can lead to a 10-20% decrease in productivity

Employee Engagement

• Low Engagement Costs: An estimated £52-£70 billion per year in lost productivity across the UK.

• Sick Leave: Poor HR management contributes to increased sick leave, costing an average of £522 per employee annually.

Reputation Damage

• Bad publicity from tribunal losses can lead to a decline in customer trust and employee morale.

• Induvial employees can be named as a discriminator and face a personal liability.

Risk Management: Best Practices

• Regular HR Audits: Ensure compliance with the latest employment laws and internal policies.

• Training: Provide ongoing training for HR staff and managers on employment law and effective HR practices.

• Clear Policies: Implement and regularly update policies on grievance handling, discrimination, and dismissal procedures.

• Employee Communication: Maintain open communication channels to address issues before they escalate to tribunals.

• Legal Advice: Regular consultation with employment law experts can prevent costly mistakes.

• Proactive Management: Investing in HR compliance and best practices is significantly less costly than handling tribunal claims and associated penalties.

• Stay Informed: Regularly update HR practices to reflect the latest employment laws and guidelines.

Case Example

Direct Sex Discrimination: A contract of employment was withdrawn due to a Claimant’s sex. The link being a question that the Claimant was asked in relation to the age of her children. The claimant was awarded £91,597.

Fact sheet courtesy of Victoria Hall, Partner at Aria Grace Law CIC