Saturday 21 April 2018

Employment Law Pointers for SMEs

Alan O'Driscoll

As the economy continues to improve, more and more SMEs are hiring staff but there are potentially high costs to an employer if they get it wrong.

As the economy continues to improve, more and more SMEs are hiring staff but there are potentially high costs to an employer if they get it wrong.

A successful unfair dismissals case against an employer can cost the employer up to two years remuneration in compensation payable to the employee. In some cases, this potential exposure can be €100,000 - €200,000 and even more.

A successful equality case can have a compensation award made against an employer for up to two years salary.

Again in certain gender discrimination cases particularly involving maternity issues, awards have tended to be quite high.

1. Contracts: In giving an employee a written contract, in addition to salary and the usual package items, make sure it has a grievance procedure and a disciplinary process. Many employers copy from the internet what they think is a good disciplinary process but it may not be appropriate to their business.

Employment Tribunals and Equality Tribunals are very more focused on the process the employer has in place to deal with disciplinary matters and whether that process was followed by the employer.

Many employers lose unfair dismissals cases not because the employee’s conduct did not merit dismissal but because the employer did not have in place or did not follow a proper process in dealing with the matter.

2. Pause before Action: An employer should never fire a person in the heat of the moment. Always call your legal or employment law adviser first. Even where the misconduct at issue may be obvious there will almost always be a need to investigate the matter before taking further disciplinary action.

3. Rights: An employee who is the subject of disciplinary action has the right to know the case against him or her, the right to reply to the allegations, the right of due consideration to be given to their replies, the right to representation by a colleague and the right to an appeal against the decision. As an employer you should set out the allegations clearly and in writing at the beginning of the process and carefully document each stage of the process.

4. Proportionate Sanction: Employment tribunals in looking at a dismissal will also ask whether the dismissal is proportionate to the misconduct complained of.

There are no hard and fast rules. A first act of serious misconduct might be seen by a Tribunal to merit a final warning but not an actual dismissal so an employer needs to be careful and take advice at an early stage.

5. Employee Protections: To have the protections afforded by the unfair dismissal legislation an employee generally needs 12 months service but this includes their notice period. Employers should not leave an evaluation of the employee’s suitability for the role until month 11, as with 1 month’s notice (which many employees have in their contract) they may have their 12 months and the protection of the legislation. An employee does not need any minimum period of service to bring an equality claim.  There have been cases of companies sued for discrimination in their interview process and an award being made against them in respect of a person who never even was engaged as an employee. 

6. Business Protections: If your know-how, client lists and intellectual property are important to your business make sure you get appropriate restrictive covenants drafted into the employment contract so that when your employee leaves, half your business does not leave with them.

Alan O’Driscoll is a partner at Flynn O’Driscoll a business Law firm with offices in Dublin and Galway (

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