How to avoid these common employment law mistakes

There are times when any employer must make tough management decisions. While employment law provides a framework for managing the process of terminating a member, or members, of staff, mistakes are often made. Many, however, can be easily avoided.

The most common mistake relating to employment law is failing to effectively manage people who, for whatever reason, aren’t working out. Whether it’s an employee’s performance, cultural fit, or the fact that the business has grown beyond them, many managers don’t like delivering bad news. Too often there is no communication until the situation reaches breaking point.

Often with entrepreneurs, early employees are friends, which adds an added dimension of discomfort. But even if not, most people aren’t great at telling others that they’re doing a bad job, or even that they’re doing a good job but that it’s a job the company no longer needs.

Generally employees only have the right not to be unfairly dismissed if they’ve already been with an employer for at least two years. If someone is past the two-year legal probation period, a three warning system should ensure a fair performance dismissal. Regardless of length of service, we would always advise a gradual escalation from informal discussions on the areas of failing, providing opportunities to improve, offering ongoing feedback and finally, if necessary, a more formal process. This way, if and when you get to crunch point, the employee is not surprised. That’s both legally right and commercially right.

Some employers (and employees) in this situation, however, prefer to reach a mutually agreeable exit through a settlement agreement, which sets out what the employee will receive in return for waiving claims against the employer.

The costliest employment errors usually relate to discrimination, particularly maternity leave. Either the individual comes back and isn’t properly reintegrated into the business, or the company prefers the maternity cover and decides to keep them in the job. It doesn’t matter if the maternity cover has settled into the job and is performing better than the person they replaced, the person on maternity leave has an unavoidable right to return to their pre-existing job. With discrimination cases, employees don’t need to have worked with you for two years and the cap on compensation for the tribunal is removed.

Employee misconduct should also be managed carefully. If the individual has been with you for two years or more, you need to go through a proper disciplinary process where the individual is told of the allegations and given an opportunity to respond. If it’s an allegation that threatens the business, it might be appropriate to suspend them while you’re investigating. If you conclude that it’s gross misconduct, then it is a lawful dismissal – at a tribunal it would have to be shown that no reasonable employer with those facts could have thought it was misconduct, which is a pretty high barrier.

Despite some claims to the contrary, British businesses aren’t overburdened with employment regulation. Britain is one of the best places to find talent to grow your business – and there is almost nothing that a good employer would want to do that is not achievable under UK employment laws.

This article first appeared in City A.M. on Tuesday 14 June 2016. You can view the full City AM article here.

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