Three ideas: avoid being taken to tribunal

1. Be scrupulous about procedure

Of the 266,542 tribunals last year, more than a fifth were disgruntled workers accusing their former employers of unfair dismissal. Of the cases lost by businesses, around 80% were lost not because the employers were in the wrong, but because they hadn't observed the correct procedures.

So even if an employee has turned up to work wearing nothing but a bowler hat and is in the process of scrawling expletives over your building's frontage in large, pink lettering; stay calm and ensure you follow procedure.

There are five valid reasons for dismissal: conduct (your naked graffiti artist would more than qualify for this), capability (where the employee doesn't have the right skills or is frequently absent), legality (if, for example, someone working as a GP isn't a qualified doctor), redundancy (if there is insufficient work or the business is closing) and 'some other substantial reason'. Avoid seeing the latter as a catch-all - 'substantial' is the keyword here.

No matter how valid the reason for dismissal you must adhere to a fair disciplinary procedure - otherwise you'll be assumed guilty. For more information on statutory dismissal procedures, take a look at Acas' Disciplinary and grievance procedures booklet (opens a PDF).

2. Sign a deductions agreement

There were almost 34,000 claims for 'unfair deductions' last year. You are not allowed to take any money out of your employees' wages except to: pay taxes (National Insurance, etc); they have agreed in writing (either by signing an agreement or as part of their contract), it is a result of statutory or disciplinary proceedings, or it is part of a tribunal decision.

For example, if you own a restaurant and a client leaves without paying, you can't deduct the amount they owe from a waiter's wages unless they have previously signed a deductions agreement - and even then, your deductions must not take their pay below the National Minimum Wage.

There is further protection for retail workers. If there is a shortfall in the till when you are cashing up at the end of the day, you can only take 10% of your employee's wages for that pay period - so if they earn £300 a week and the till is £60 short, you can only take £30 one week, then £30 the next.

To read more about deductions, see the direct.gov employment guidance.

3. Be fair

Even though the Equal Pay Act was passed back in 1970, research has shown men are still earning 17% more than their female counterparts - which means on average, women earn £369,000 less than men during the course of their lifetimes.

There were almost 46,000 equal pay claims taken to tribunal last year. 'Equal pay' doesn't just mean wages, it includes your business' entire benefits scheme: that'ss bonus payments, company cars, health benefits and pensions.

To make sure you're paying your employees fairly, undertake a job evaluation, comparing each member of staff's qualifications, skills, effort and decision-making. Make sure you aren't looking at each job in isolation - instead, come up with a number of pre-set criteria and compare. Don't make basic assumptions: part-time jobs, for example, are not easier and casual and temporary workers - bar a few exclusions - now have equal benefits rights as permanent staff.

If you need to refresh your memory on what equal pay looks like, download the code of practice on equal pay from the Equality and Human Rights Commission (EHRC).

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