Unfair dismissal claims on the rise

by Catherine Woods - Tuesday, 3rd February 2009 -

Some small business owners are being hit with lawsuits because they’ve failed to follow the correct statutory procedures when it comes to making employees redundant.

Small business insurer Hiscox says there has been a threefold rise in insurance claims during the last quarter from SME employers being sued by former workers for unfair dismissal. The firm says employers are leaving themselves exposed to significant claims.

According to Hiscox, the top three claims when it comes to redundancies are:

1. Failure to follow collective consultation procedures and obligations – necessary where 20 or more workers are at risk and are proposed to be made redundant within a 90 day period.

2. Employers not carrying out a fair and reasonable selection process - for example, not properly pooling people when choosing which people to make redundant.

3. Employers making people redundant where the reason does not genuinely relate to redundancy.

Gary Head, SME expert at Hiscox, says: “Many SME owners will not necessarily have lived through a recession where redundancy has been a fact of working life and are unaware of what they need to do.

"All businesses should seek professional advice when it comes to making redundancies or they might find that what started out as a cost-cutting exercise could cost them far more in the long run.”

Read Real Business’s guide to sacking your staff here

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