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As the global economic downturn counts the cost of rising job losses, employers should be alert to the threat of increased post-redundancy litigation by ex-employees, much of which is purely speculative. According to international law firm Freshfields Bruckhaus Deringer, companies need to tighten up their policies to reduce the risk of disgruntled former employees bringing claims against them, and should act now to ensure they are up to scratch in key areas such as compliance and communication. Kathleen Healy, partner in the London employment, pensions and benefits practice at Freshfields, comments: ‘At a time when many people are being made redundant, the difficulty of finding re-employment is leading to increased levels of litigation following redundancy, particularly with claims of whistleblowing and discrimination on the rise. In some countries, including the UK, damages linked to these types of claims are uncapped, which makes it tempting for employees to give it a try, however speculative their stories. For example, you may find an employee claiming they were sacked for whistleblowing, when in fact the issue was already under investigation by their employer. ‘We have also seen other types of claims increasing in the UK and across Europe, such as employees who claim that non-payment of their bonus amounts to constructive dismissal.’ Klaus-Stefan Hohenstatt, head of Freshfields' global employment practice, continues: ‘As an added complication, individuals with international contracts may spend time choosing the most advantageous jurisdiction for them to bring a claim, making the dispute more difficult for the employer to handle.’ Emmanuel Bénard, head of Freshfields' employment practice in Paris, adds: ‘The extent of the current crisis means that unions and employee representatives are likely to react strongly against any business decisions that might have an adverse effect on workers. This can lead to high-publicity wildcat strikes such as those seen recently in the UK's oil and gas industry, or even to such extreme outcomes as executives being held by workers in the company premises, as seen recently in France.’ In light of these increased risks, what can employers do to minimise the possibility of claims being brought against them by ex-employees, particularly when these are not justified? Kathleen, Klaus-Stefan and Emmanuel identify seven key areas where employers should watch out: Compliance. ‘Employers should ensure their compliance policy is up-to-date and effectively enforced.’ Coordination. ‘Companies’ in-house legal teams need to be close enough to key business lines and to be working effectively with HR. It is a good idea to ensure there is a record of all relevant existing key agreements, both collective and individual.’ Communication. ‘Organisations should communicate both internally with employees and their representatives and externally with unions, regulatory/ local authorities and the press.’ Governance. ‘Employers should review their internal control and investigation policies.’ Funding. ‘Any public funding a company has obtained must not interfere with planned measures – for example, if a commitment had been made to maintaining a minimum workforce.’ Remuneration. ‘Companies should review their remuneration and bonus policies, particularly in light of any new government or regulatory measures.’ Redundancies. ‘Employers must be careful with selection procedures and make sure that they carry out consultations properly.’
Compliance. ‘Employers should ensure their compliance policy is up-to-date and effectively enforced.’
Coordination. ‘Companies’ in-house legal teams need to be close enough to key business lines and to be working effectively with HR. It is a good idea to ensure there is a record of all relevant existing key agreements, both collective and individual.’
Communication. ‘Organisations should communicate both internally with employees and their representatives and externally with unions, regulatory/ local authorities and the press.’
Governance. ‘Employers should review their internal control and investigation policies.’
Funding. ‘Any public funding a company has obtained must not interfere with planned measures – for example, if a commitment had been made to maintaining a minimum workforce.’
Remuneration. ‘Companies should review their remuneration and bonus policies, particularly in light of any new government or regulatory measures.’
Redundancies. ‘Employers must be careful with selection procedures and make sure that they carry out consultations properly.’
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