Disgruntled workers put businesses off redundancies

Published:  24 August, 2009

GUILDFORD: Despite UK unemployment figures at the highest they have been in more than a decade, new research from business insurers Premierline Direct, reveals small business owners are too afraid to make redundancies for fear of being sued.

With limits on awards for unfair dismissal and redundancy payments increasing earlier this year, businesses fear the potential financial consequences of redundancies.  In addition, around two thirds of company bosses (64%) think staff would be out for revenge and over half (55%) suspect they would attempt to get a bigger compensation payout.

Of the business owners worried about being sued by workers, 73% said it's because the business does not have the necessary funds to afford a pay out and over a third (36%) would be worried they hadn't followed the correct procedures. 

Worryingly, over a third (37%) of small businesses that have had to let staff go did not seek legal or HR advice beforehand, leaving themselves open to potential claims.  In addition, many overlook the available cover that would help them face court action from an ex-employee with only half (51%) having legal protection insurance.

Chris Little, managing director of Premierline Direct, comments: "Redundancies have increased considerably in line with the economy's performance and many business owners are facing the prospect of having to make staff redundant; something which they might not have experienced before.  What bosses might not realise is that there is plenty of help available to guide them through the process including cover provided through their business insurance policy.  For example, some insurers including ourselves offer free legal helplines, which can provide policyholders with advice on redundancy procedures and, if the customer has commercial legal protection, legal expenses costs arising from a dispute may also be covered." 

In addition to offering commercial legal protection, Premierline Direct offers customers access to a legal and tax and helpline, providing free, impartial expert advice on a range of issues including handling the redundancy process.

Premierline Direct is part of the Global Allianz Group and provides cover to a wide range of industries from shops and offices to hotels and manufacturing, tailoring its insurance packages to meet the diverse needs to each business.

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