Counting the cost of unfair dismissal

New employment laws for dismissal (including redundancy dismissals) came into force on 6th April this year, following the Employment Act 2008. Despite being designed to tackle the shortfalls of the current process, employment law specialist, Mary Sutton, of leading law firm Tolhurst Fisher, warns employers the cost of getting things wrong is as great as ever.

Under the new laws, the procedure for dismissals (including redundancies) s no longer statutory. This means there will be fewer hoops for employers to jump through and less risk of unfair dismissal based on a technicality. The emphasis will instead shift toward mediation, following the ACAS Code of Practice.

However, Mary warns "The new regulations should not be seen as a green light to offload staff without warning. Many employers believe that as long as they have a good reason to dismiss somebody, including redundancy, this is all that matters, but they must also follow the right procedure."

She added, "While the laws have changed, the employer's responsibilities haven't. For example, dismissals cannot be made without warning and employees still have the right to appeal. In a tough financial climate, it is crucial that employers stay up to date with new legislation or risk facing claims of unfair dismissal. With substantial costs involved, this could be the final nail in the coffin for many businesses."

For any unfair dismissal claim that goes to tribunal, whatever the outcome, the employer's legal fees are likely to be at least £5000 and they will not usually be able to recover these costs from the employee. In addition, the employer will have to pay compensation, up to a maximum of £66,200, if they lose the claim. By comparison, specialist legal advice can be sought for just a fraction of the cost.

There are also wider issues than financial loss; any claim can detract from the main business focus and have an unsettling effect on staff, with a significant effect on productivity. In addition, the issue could generate negative publicity, harming the employer's reputation.

Therefore, it is vital that anybody considering dismissing an employee for any reason, including redundancy, obtains expert legal advice - a small investment that can save thousands of pounds and even the very existence of the business.

Tolhurst Fisher has one of the region's leading employment departments.