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16 February 2015

5 Ways Employers Can Avoid Costly Mistakes

Posted By: AIB Business

As the economy continues to improve, more and more SMEs are hiring staff, but there are potentially high costs to an employer if they get it wrong. The dice are weighted in favour of the employee and it is important to act in ways to minimise this, writes Patrick Flynn from Flynn O'Driscoll.

A successful unfair dismissals case against an employer can cost the employer up to two years’ remuneration in compensation payable to the employee. In some cases, this potential exposure can be €100,000 - €200,000 and possibly more.

A successful equality case can have a compensation award made against an employer for up to two years’ salary and, in certain gender discrimination cases – particularly involving maternity issues – awards have also tended to be quite high.

Here we have reviewed five of the most common and costly mistakes that employers make, and we advise on how to avoid these pitfalls.


1. Review Your Contract Templates

When providing an employee with a written contract, make sure that – in addition to salary and the usual package items – it includes a grievance procedure and a disciplinary process that fit your business. Many employers copy from the internet what they think is a good disciplinary process but it may not be appropriate. You must follow your own procedures and policy to the letter.

Employment Tribunals and Equality Tribunals are often more focused on the process the employer has in place to deal with disciplinary matters and whether that process was followed by the employer. A surprisingly low amount of emphasis is often placed on any employee wrongdoing.

Many employers lose unfair dismissals cases not because the employee’s conduct did not merit dismissal but because the employer did not have in place, or did not follow, a proper process in dealing with the matter.


2. Pause Before Action

An employer should never fire a person in the heat of the moment. Always call your legal or employment law adviser first. Even where the misconduct at issue may be obvious, there will almost always be a need to investigate the matter before taking further disciplinary action.

An employee who is the subject of disciplinary action has the right to know the case against him or her, the right to reply to the allegations, the right of due consideration to be given to their replies, the right to representation by a colleague, and the right to an appeal against the decision. As an employer, you should set out the allegations clearly and in writing at the beginning of the process and carefully document each stage of the process.


3. Impose Proportionate Sanctions

When looking at the fairness of a dismissal, Employment Tribunals will ask whether the dismissal is proportionate to the misconduct complained of.

There are no hard and fast rules. A first act of serious misconduct might be seen by an Employment Tribunal to merit a final warning but not an actual dismissal, so an employer needs to be careful and take advice at an early stage.


4. Know Your Notice Periods

To avail of the protections afforded by the unfair dismissal legislation, an employee generally needs 12 months’ service but this includes their notice period. Therefore, employers should not leave an evaluation of the employee’s suitability for the role until month 11 as, with one month’s notice (which many employees have in their contract), employees may then have their 12 months and the protection of the legislation. An employee does not need any minimum period of service to bring an equality claim. There have been cases of companies sued for discrimination in their interview process and an award being made against them in respect of a person who was never even engaged as an employee.


5. Protect Your Business

If your know-how, client lists and intellectual property are important to your business, make sure you get appropriate restrictive covenants drafted into the employment contract so that when your employee leaves, part of the value of your business does not leave with them.


Written by: Patrick Flynn, Managing Partner, Flynn O'Driscoll – Business Lawyers

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