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Sage Advice For Businesses Wanting To Avoid Employee Lawsuits

People who start their own businesses know a thing or two about risk. They know, for example, that the price they’ll get for their product might go down next year. And they know that they might not see any return on their investment. But one thing that all businesses dread is being sued.

The key to not getting sued is, of course, prevention. As an employer, your best protection is to stick doggedly on the side of the law. But often the law is complicated. And sometimes you’ll find that things slip through the cracks.

The key to avoiding employee lawsuits is to know how to plug those cracks and what to do if a tribunal is threatened.

Be Clear About What You Expect From The Start

Nothing sets the tone that you have with your employees better than your first meeting. Here is your opportunity to set out what your company expects from its employees. You can be as blunt as you like, since the employee, as yet, is not invested in your organisation. Plus, there’s no risk of appearing to be inconsistent in your approach.

Setting expectations from the start is important for a number of reasons. But the main reason is that it reduces the risk that you’ll be sued. If you’re clear about what you expect from the start, you’ll find taking disciplinary action a lot easier. Employees will not be able to say that they didn’t know about company policy since this was set out in their interview.

It also important because it helps to define disciplinary proceedings. Remember, as a company, the task isn’t to ascribe fault to the employee. It’s simply to work out whether an employee followed company policy or not. If they didn’t, then, of course, they should face sanctions. Companies arrive at problems when they deviate from their disciplinary policies.

Go For Early Conciliation

Tribunals tend to be both ugly and expensive. And so anything that you can do to avoid them is well worth it.

In most countries, employers have the option to take advantage of early conciliation. Often, they’ll have to run their claim past an employment regulator. And it’s at this point that they are given the option to settle. If you know that your business is in the wrong, settling can be a great way to avoid the costs of a tribunal.

It’s important at this stage not to be led astray by wild claims. Consult the experts and get a sense of how much the claim against you is worth, if anything.

Use Extreme Caution When Letting People Go

No employer enjoys letting people go. But in certain circumstances, there are no other options at your disposal. The problem, however, is that this also tends to be the most sensitive point in any employer-employee relationship. Often a termination comes weeks or months after problems started. And in these events, firing somebody can lead to legal proceedings and tribunals.

The trick here is to do everything by the book. Make sure that there are no grounds on which an employee can argue that it was unfair dismissal. If an employee simply isn’t pulling their weight, offer them a severance package. These packages are great for smoothing over the cracks in your relationship.

Severance pay might sound a bit like a kick in the teeth. But remember, paying the salary of somebody who is not adding value is a lot more expensive.

Make Use Of Employee Liability Insurance

Employee liability insurance is mandatory in some countries. But if your business is in a country where it is not, consider getting it anyway.

First off, it’s worth saying that employee liability insurance doesn’t come cheap. Premiums tend to be high because the risks are high. Of course, as a business owner you’ll have to weigh up those risks. But don’t just assume that you’ll be able to pay employee claims out of revenue.

While it’s true that insurance companies take a cut of your money above the risk, they help avoid hefty legal expenses. And it’s these large, one-off legal expenses that can cause a lot of small businesses to go under. You may find that as a result of one employee tribunal, you have to lay off other workers.

Observe The Law

Of course, none of this matters if you haven’t obeyed the law. Insurance companies don’t have to pay out each time you make a claim. If you have acted in a criminally negligent way, your insurance won’t cover you.

That’s why it’s worth keeping to the letter of the law. Of course, that’s easier said and done when legal codes are as long as they are. But the more you’re able to prove that you’ve obeyed the law, the better position you’ll be in.

Make sure that each employee has a handbook that details their role and what is expected of them. And ensure that the employee handbook itself is done in collaboration with employees. If any changes to company policy are made, be sure to get the consent of employees.

And finally, whenever you do discipline a member of staff, follow the procedures as set out. Deviating from these procedures can hurt your case against them.

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Be Honest With Yourself

Let’s suppose for a moment that the worst has happened and an employee has been injured or does have a claim. Let’s also suppose that you know for a fact that you were at fault as an employer. It’s likely that their claim will go to a tribunal. It’s likely that the truth will get out in the end. And so, when you do meet with your legal team, be open and honest about the situation.

Even when you have been at fault, there is usually no need to go through costly legal proceedings. More often than not, you’re able to settle with employees outside of any tribunal. If the truth is that you have been negligent in some way, this is probably the best outcome you can hope for.

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