+Scott Watson

Tuesday, 22 March 2011

Use of compromise agreements increases significantly

More than half of employers surveyed by the CIPD say that their use of compromise agreements has increased in the last two years, with more than two-thirds saying they use such agreements, even in the absence of an existing claim. This is one of headline findings of the CIPD’s Conflict Management survey. The median compensation payment was £10,000 but one in five employers reported that the typical payment was £25,000 or more.

Albeit on a relatively modest sample size of 206 organisations with an average number of staff in each of just over 2,000, the CIPD’s survey reveals that more than two out of three employers (69%) say they have no effective protection against employees making wholly unjustifiable claims to employment tribunals. The report shows three in five respondents (61%) have experience of an employee claiming unfair dismissal and ‘tagging on’ a discrimination claim in the hope of getting more compensation. Over half of employers (55%) say they have endured a complaint against their organisation on malicious grounds. More than half think the law on unfair dismissal should be amended to make it easier for employers to dismiss. A similar proportion (54%) also support more effective case management to identify ‘vexatious’ claims, with exactly half supporting the move to require tribunals to award costs against losing claimants.

Mike Emmott, Employee Relations adviser at the CIPD, said: ‘This survey reflects the strength of feeling among employers about the failings of the current system for resolving workplace disputes. [It] also suggests that recent plans outlined by the government – to increase the minimum period employees serve before they can claim unfair dismissal from 12 months to two years – will have only limited impact on the number of claims. This is because many claims are linked to discrimination claims which can be made from day one of employment. The real problem is that the employment tribunal system itself is broken and its costs and benefits are wholly out of line. The government needs to take a radical look at the existing machinery for protecting employment rights’.

Other findings include:

The number of days management and HR spent on managing both disciplinary and grievance cases as gone up since 2007, the last time the CIPD conducted a similar survey: from 13 to 18 days (disciplinary) and from 9 to 14.4 days (grievance)

There are significant differences between sectors – the number of days of management time (excluding HR) spent on handling grievances in the public sector (9 days) is much higher than private services (5.5 days)

There have been significant increases in the use of most forms of managing conflict, internal and external. Almost half of respondents say their organisation has increased its use of disciplinary action (50%) and grievance procedures (48%)

More employers seem to be using mediation to resolve workplace issues (some 80% in the public sector and nearly 50% in private services. Those who don’t use mediation cite its costs and their belief that there is no clear business case

Three out of five (62%) say their organisation is making increased use of training line managers in handling difficult conversations

Major reasons for using compromise agreements (other than to settle an existing claim) are to remove an employee on grounds of poor performance or misconduct (39%), to avoid legal challenge in relation to redundancy (26%) and to make it easier to remove senior staff without embarrassment (24%)

The median cost of management time for dealing with a typical compromise agreement is reported as £1,000; the median cost of legal advice in drawing up an agreement is £750. Looking at the total costs involved, including compensation, the median was £11,000 and the maximum £110,000

Article published with the kind permission of Craig Gordon or www.HRBullets.co.uk

No comments:

Post a Comment