Employers looking to cut costs by axing staff are finding themselves in hot water.

Instead of making financial gain via redundancy, employers are facing greater costs by falling foul of employment legislation, according to Croner, a workplace information and consultancy provider.

Statistics from the UK Tribunals Service highlights the growing problems. It has seen a 42% rise in claims over the last 12 months alone, whilst Croner has seen a 5% hike in the claims it handles on behalf of employers over the last three months.

Richard Smith, head of litigation at Croner, said: “Economically this is a dark time for UK businesses and employers are increasingly looking at ways in which to preserve their long-term future. Many believe that the only way to do this is to make employees redundant. However, because they’re often unaware of the procedures involved in dismissing someone fairly they are not only paying out the costs of making staff redundant, they’re also faced with litigation costs and tribunal awards.”

Kylie Coulter, a solicitor at Thomas Eggar’s employment team told HR Zone that since the end of 2007 the firm has seen a definite increase in the amount of redundancy advice it has given: “Individuals also seem to be less averse to bringing claims, as in the current economic climate finding a new job is not an easy task. The lack of employment opportunities also means that the amount which a successful claimant is likely to recover is greater, adding to the attraction of bringing a claim. To compound matters, claimants seem less willing to settle prior to issuing a claim as they have less money available and therefore cannot afford to make a significant compromise.

“This triple whammy is likely to have led to a significant increase in tribunal claims and we anticipate that this will continue for the foreseeable future.”