Surge in Employment Tribunals: Experts Warn of Simple HR Mistakes to Avoid

Amid a surge (+22%) in employment tribunal claims, experts share tips on identifying HR red flags and avoiding costly legal disputes.

Good human resources (HR) practices are crucial for maintaining a healthy workplace and failing to spot the HR red flags can quickly land a business in trouble, potentially resulting in being taken to an employment tribunal.

To help business owners avoid this fate, the experts at money.co.uk business insurance have analysed government data to reveal the most common issues that lead to workplace claims and offered tips to prevent them. 

The most common issues that are driving workers to take their employers to court over:

Unauthorised deductions and wage-related claims

The most common claims relate to unauthorised deductions. This suggests that many employees face issues with their wages, whether through improper deductions (25,821 claims) or failure to meet the minimum wage (3,728). 

Additionally, 701 claims were made regarding written pay statements, indicating that some employers may not provide proper pay slips.

Working time and contractual claims

Working Time Directive claims (21,390)and breach of contract claims (20,798) are also common. These issues often relate to disputes over working hours, overtime, and other contractual obligations. 

The significant number of claims suggests a lot of non-compliance or misunderstandings about employment contracts and working time regulations.

Discrimination claims

Discrimination claims are a significant portion of employment tribunal cases. Equal pay claims (13,594) are particularly high, reflecting ongoing gender pay gap issues. Disability discrimination (7,312) is the most common type of discrimination claim, showing the challenges many disabled employees face in the workplace. 

Race (3,963) and sex discrimination (3,771) are also notable, along with smaller but still significant numbers for age (2,031), pregnancy-related (1,174), religion or belief (782) and sexual orientation discrimination (491).

Kyle Eaton, money.co.uk business insurance expert, offers his tips on how to prevent HR issues and promote positive employee relations:

Clear policies and procedures

“Establish clear procedures and policies that are easily accessible to all employees, including:

• Equal opportunities policy: Ensures all employees are treated fairly.
• Grievance and disciplinary procedures: Clear steps for addressing complaints and misconduct.
• Anti-harassment and anti-bullying policies: Promotes a respectful workplace environment.

Effective communication

“Promote open communication with regular team meetings and anonymous feedback systems. An open-door policy encourages employees to discuss issues directly with management.”

Training and development

“Invest in regular training for employees and managers, including inductions and refreshers, to ensure all levels of staff understand company policies and expectations. Equip managers with skills to handle disputes and foster a positive work environment.”

Conflict resolution

“Develop effective conflict resolution strategies, including mediation services to resolve disputes before they escalate, conflict resolution training for managers, and early intervention to address conflicts quickly and prevent escalation.

Business Insurance 

“To protect businesses from HR-related claims, especially those involving employment tribunals, having the right insurance policies is crucial. Here are the key policies to consider:”

• Employment practices liability insurance (EPLI): The policy is specifically designed to cover claims arising from employment-related issues, including discrimination, wrongful termination, harassment, retaliation, or breach of contract.
• Directors and officers (D&O) insurance: Provides liability coverage for company directors and officers against claims for wrongful acts, including personal liability in employment tribunal claims and regulatory actions from taken by regulatory bodies such as the FCA or HSE.
• Legal expenses insurance: This covers the legal costs associated with defending against employment-related claims, including legal representation, settlement costs, and advisory services.
• Public liability insurance: Primarily covers third-party injury or property damage claims but can extend to certain employment-related claims, such as third-party harassment.
• Employers’ liability insurance: Mandatory in the UK for most businesses with employees, covering work-related injuries or illnesses and legal costs for defending claims of employer negligence.

“For businesses, having the appropriate insurance policies is essential for mitigating the financial risks associated with HR-related claims, particularly those that could lead to employment tribunals. 

“Employment practices liability insurance (EPLI) is the most comprehensive coverage for these types of claims, but directors and officers (D&O) insurance, legal expenses insurance, and employers’ liability insurance also provide valuable protection. 

“By ensuring these policies are in place, businesses can better manage risks, protect their financial health, and focus on fostering a positive and legally compliant work environment.”