News Category: Legal Issues
A number of recent reports out this week have highlighted that an increasing number of firms are seeking assistance regarding the legality of making their employees redundant. As the global economic conditions continued to deteriorate, more and more businesses are expecting to cut staff costs and make more people redundant. The Allianz insurance group said its law phone telephone helpline had received a huge number of telephone calls regarding redundancy questions last month. This time last year employment issues represented 2.4%, compared to a jump of 30% last month. Ian George, solicitor for Alliance said: "We are seeing an unprecedented number of redundancy related telephone calls. It started off in the transport and logistics sectors and has seen rapid growth across the UK, and clearly reflects the current economic environment.". Meanwhile the law firm, Travers Smith has also reported an increase in the number of employer enquiries regarding the legal indications of making is their staff redundant. More bad news also came from a joint report by KPMG and the CIPD, which found that firms planning to make staff cuts rose to 27% from 22%. Also, only half the employers surveyed plan to review staff salaries pay awards, despite rising costs of living. In addition, a KPMG survey found half of the 200 senior managers from major firms, planned to make staff redundant later in the year.
Most economists expect the UK to fall into recession in the second half of the year. With global inflationary pressures from energy and food putting pressure on consumers and small business, the monetary policy committee seems powerless to reduce interest rates or risk further inflation. The medium term impact of uncertainty and a fall in global conference is the rise compulsory redundancies and voluntary redundancies in the UK. Economists such as the Ernst & Young item club have predicted unemployment will rise from 1.6 million people today, to over 2 million people by the end of 2009. The personal debt fuelled consumption culture of the last decade is becoming so serious that businesses are beginning to shed jobs. Thousands of jobs have been lost recently in the construction industry and financial services as the crunch continued to bite. The office of National statistics reported last week that the number of people claiming benefits in July 2008 rose for the sixth month in a row to over 20000, representing a 15% rise, to 864,700. The statistics also show that there is also a drop in 47,000 in the number of vacancies available to the unemployed. For many UK workers, the threat of redundancy is becoming an increasing fear.
Meanwhile employees standard of living is falling. Average earnings increases had recently been reported as 3.4%, while headline inflation is now 5%, representing a fall in real incomes. Ordinary household are saving less now than they have done than in the last 50 years since statistics were compiled. Meanwhile, the British Bankers' Association announced that recovery in the housing market looks bleak, with mortgage approvals down to a 10-year low since records began. House prices in Britain are now 10% lower than they were a year ago. With lending criteria tightened, only homebuyers with a 25% deposit can now be approved for a mortgage.
It appears that employers are uncertain of the legal implications of making an employee redundant, after so many years of growth and recruitment. Employment law changes all the time and disgruntled employees may choose to take legal action against an employer they feel as broken statutory laws or their employment contract. Young managers with no experience of a downturn are seeking information regarding the proper legal position for managing a redundancy process. The number of employment tribunal's hearing disputes between employees and employers is likely to rise.