When we are talking organisational change, we are often talking about making pivotal decisions that could lead to redundancies, restructures, and/or TUPE (Transfer of Undertakings Protection of Employment) transfers.
These changes can be fraught with risks, issues, and impacts, and employers must navigate these with caution, weighing up the risks against strategic foresight and intent. While financial outlays are typically measurable, the effects on morale, reputation, and productivity are harder to measure, but often profound.
On the surface, the law can look straightforward, and people can easily be fooled into thinking they fully understand it – especially if they have experienced it first-hand. However, this is often nowhere near enough experience or information to be able to run a successful and compliant change programme. Leading to organisations falling short of their legal obligations.
Understanding UK employment tribunal costs
The average cost of a tribunal in the UK is reported to be around £8,500, and while this might seem low enough to justify taking risks, in reality the risk and trues costs will be actually much higher.
Firstly, the number is likely skewed downwards, as a lot of issues are resolved long before they get to court, often at a much higher cost.
If these cases had reached the tribunal, the average would likely have been considerably higher.
Taking a risk based on the average number is also running a high risk, if the claim being made against your organisation is potentially uncapped.
Of course, that is also just the average settlement figure in a tribunal. This isn’t the only cost. Employment tribunals will include costs other than the final settlement figure itself. For ease here is a breakdown of some of the pivotal elements to consider when understanding the risk and costs involved:
1. Claimant main expenditure considerations:
- Initiation Fees: Launching a claim is free of charge.
- Representation: Legal advisor costs can vary significantly; if the claimant wins you could be liable for these costs.
- Expert Testimonies: Fees for specialist insights may apply.
- Case Preparation: Research and evidence compilation have associated costs.
2. Employer main outlays:
- Defence costs: Employers bear their own legal fees.
- Bundle building: For court you will need detailed formatted, bundled evidence files. These may be created internally, which means opportunity cost, or can be created externally at a higher premium.
- Investigation and gathering evidence: This can be time consuming, costly and ultimately fruitless, if the information isn’t readily available or not as stated.
- Expert opinions/witnesses: Similar to claimants, employers may face expert witness fees.
- Legal counsel: Hiring solicitors incurs additional expenses.
- Hearing expenses: Attending the tribunal has its costs.
The above serves as a quick guide for UK employers, providing clarity on some of the direct financial risks they may encounter.
It underscores the importance of each decision a business makes and the potential ripple effects each decision has.
It’s also crucial to note that each case’s unique circumstances will influence the financial burden, with legal adjudicators determining the final cost responsibilities associated with the judgement.
For today we will focus just on the direct costs, in part 2 we will look at some of the indirect cost impacts on your business of fighting an employment law case.
3. Proactivity is best
Prevention is always far better than cure in almost all walks of life. It’s no different when you are looking at “how” you manage HR within your business. Your HR team are effectively your “prevention team”; if you underinvest in prevention, prepare to spend more on cure.
Clients come to us regularly when the damage has been done and they are looking for a quick fix or even when they are told that where they find themselves is a redundancy situation or is a TUPE situation. Too often the horse has bolted and what were risks are now issues.
The earlier our services are engaged, the better. The more we partner to understand the implications and the best way to prevent a situation the better. Our best results – and therefore the best results for organisations – come about when we are involved early in the process, have a chance to discuss the wider impacts and indeed opportunities, and when we still have multiple options left available. It also means we can help with future prevention by moving you from a reactive situation that was painful and costly to a proactive scenario whereby you have peace of mind and clarity.
Get in touch
To find out how we can support your business to navigate organisational change as smoothly as possible, get in touch with our specialists. Call us today on +44 (0)1491 414010, or email info@connor.co.uk.