The Cost Of Compensation
- Blog Article • April 1, 2018
Lee Andrews, CEO of DOC Cleaning, reports on the abolition of employment tribunal fees: is this a positive or negative development for our industry?
In July 2017, following a ruling by the Supreme Court, the government abolished Employment Tribunal (ET) fees. During the four years after the fees were introduced in 2013, the number of cases brought to ET had dropped by around 70%, raising the question as to whether the growth of a compensation culture had been duly stifled, or whether the opposite was happening and justice was no longer being served.
Interestingly, it is rumoured that the introduction of these fees in the first place was designed mainly to fund the running costs of the system, rather than to influence people’s likelihood of claiming. It’s also suggested that when the unions lobbied for the fees to be removed, they were actually after a reduction, rather than outright removal – the fees had ranged for £150 for a simple loss of wages to £1200 for unfair dismissal. So maybe the solution actually overcompensated for the problem?
Either way, the changes have taken effect and it is reported that in the first quarter after re-introduction, claims rose by 64% compared to the previous year – in other words, ‘normal service’ has resumed.
The downside for contract cleaning is that we seem to attract more than our fair share of ET claims. As anyone who’s been through the experience will know, a claim is usually a no-win situation for the contractor, even if defended successfully. The costs of legal representation, added to the time spent preparing the case and giving evidence in court, often outweigh any potential award, making it cheaper to settle out of court. Disgruntled employees and their advisors are only too well aware of this of course. So where do we go from here?
IS THE CLEANING INDUSTRY PARTICULARLY SUSCEPTIBLE TO ET CLAIMS?
I think the answer here is yes for three main reasons. First, as an industry we have difficulty with TUPE – there are too many cases where TUPE is either not correctly interpreted and applied, or staff information is not honestly disclosed, resulting in unfair dismissal claims.
The second is the very high ratio of frontline staff as compared to the number of managers trained to apply HR practice correctly, leading to more HR ‘accidents’.
The third is that a fairly low percentage of cleaning contractors can actually afford to employ dedicated HR staff, so will either outsource to consultants, or try and deal with issues in-house, sometimes less effectively than is needed, which results in the inevitable claim or settlement. The problem is, it only takes two or three staff out of the hundreds employed to ‘have a go’ and all of a sudden resources can be severely stretched.
WHAT CAN WE DO TO STOP CLAIMS HAPPENING?
One answer would be to re-introduce a fee, along with a means-tested system of fee remission, that ensures access to justice, but discourages someone from taking a shot at their employer on a ‘something for nothing’ basis. Of course this is not going to happen in the near future, but it may be something for the powers that be in our industry to add to their lobbying list?
An easier step for us all to take, however, is to address the root causes. Firstly, that means ensuring smaller companies have access to proper guidance on TUPE – how about our industry developing a library of case studies that could be accessed by any contractor, or indeed employee? Secondly, and most importantly, it means working harder at staff engagement.
By this, I mean setting out standards of behaviour clearly in contracts or staff handbooks, creating an atmosphere where staff do not see the world of work as ‘them and us’, and training management to apply best practice in dealing with disciplinary and grievance issues when they do inevitably occur.
It’s always said that people work better when they know where they stand, and if that means we can head off the re-emergence of the energy sapping event that is the employment tribunal claim, then it’s surely worth aspiring to.
Published in April issue of Tomorrows Cleaning