Employment tribunal claims can be costly, time-consuming and disruptive for any business. In many cases, the greatest risk for employers is not the commercial decision itself, but the process followed, the records kept and whether employees have been treated consistently.
With changes under the Employment Rights Act 2025 being introduced over 2026 and 2027, now is a sensible time for employers to review their contracts, policies and day-to-day management procedures. From 1 January 2027, the qualifying period for protection against ordinary unfair dismissal will reduce from two years to six months, and the cap on compensatory awards for unfair dismissal will also be removed. Tribunal time limits are also due to increase for many claims, with the Government’s implementation timeline saying employment tribunal time limit changes will take effect no earlier than October 2026.
Kat Moody, Associate Solicitor at Richard Reed Solicitors, said:
“Tribunal risk often comes down to evidence. Employers may have had a valid reason for acting, but if the process was unclear or there are no records to support the decision, defending a claim becomes much harder.”
Start with clear contracts and policies
A well-drafted employment contract is one of the simplest ways to reduce workplace disputes. Employers should make sure employees receive clear written terms at the start of employment, covering key areas such as pay, hours, duties, place of work, notice, benefits and any flexibility required. Employers must provide a principal written statement on or before the first day of work.
Contracts and policies should also be reviewed when roles, pay, hours or working arrangements change. Informal agreements made verbally, by email or through custom and practice can create uncertainty later if they are not properly documented.
Keep proper records
Good record keeping is essential. Tribunal claims are decided on evidence, and a contemporaneous note made at the time of a meeting or decision will usually be more persuasive than an explanation prepared months later.
Employers should keep accurate records of recruitment decisions, contracts, pay, working time, holiday, sickness absence, reasonable adjustments, performance management, disciplinary action, grievances, redundancy consultation and termination decisions.
Kat said: “A short note made at the time can make a real difference. Employers do not need to overcomplicate record keeping, but they do need to be able to show what was considered, who made the decision and why.”
This will become even more important as tribunal time limits change. The Employment Rights Act 2025 provides for time limits for many employment tribunal claims to increase from three months to six months. That means employers may need to justify decisions long after the relevant events took place.
Follow a fair process
Disciplinary, grievance, redundancy and dismissal procedures are common sources of tribunal claims. Employers should avoid rushing to an outcome or deciding the result before the process has been completed.
In disciplinary cases, this means carrying out a reasonable investigation, giving the employee clear information about the allegations, holding a fair hearing, allowing the employee to respond and offering a right of appeal.
The Acas Code of Practice should be followed in disciplinary and grievance matters. If an employer unreasonably fails to follow the Code, a tribunal can increase compensation by up to 25%.
Grievances should also be taken seriously, even where the employer believes the complaint is unfounded. A quick dismissal of an employee’s concerns can make matters worse and may strengthen the employee’s position if a claim later follows.
Be careful with sickness, disability and discrimination issues
Discrimination, harassment and victimisation claims remain high risk for employers. There is no formal limit on the amount a tribunal can award in discrimination cases, although injury to feelings awards are guided by the Vento bands.
Common pitfalls include inconsistent treatment, inappropriate recruitment questions, failing to deal with harassment, penalising employees for raising concerns, and making assumptions about pregnancy, childcare, age, disability or sickness absence.
Sickness absence also needs careful handling where an employee may have a disability or long-term health condition. Employers should consult with the employee, consider medical evidence where appropriate and assess whether reasonable adjustments are needed. Acas guidance confirms that employers must make reasonable adjustments where they know, or could reasonably be expected to know, that someone is disabled and is experiencing difficulty at work or absence linked to their disability.
Kat said: “Policies are important, but they are not enough on their own. Managers need to understand how to apply them fairly, particularly where absence, disability, discrimination or whistleblowing concerns are involved.”
Review probation and short-service dismissals
Probationary periods should not be treated as risk-free. Employers should document probation reviews, raise concerns promptly, give support where appropriate and keep evidence of any decision to extend or terminate employment.
The forthcoming reduction in the ordinary unfair dismissal qualifying period from two years to six months means employers should be particularly careful when managing new starters. Existing day-one protections against discrimination and automatically unfair dismissal are not changing.
Use settlement agreements appropriately
Settlement agreements can be a useful way to resolve workplace disputes and avoid litigation. However, they need to be handled carefully. Employers should avoid presenting a settlement agreement in a way that suggests the outcome has already been decided before a fair process has taken place.
Where settlement discussions are appropriate, they should be clearly managed and any agreement must meet the statutory requirements for a valid waiver of employment claims.
Practical steps for employers
Employers can reduce tribunal risk by reviewing employment contracts and staff handbooks, training managers, keeping clear records, following fair procedures and dealing with complaints early. It is also worth reviewing dismissal, grievance, disciplinary, redundancy, sickness absence and flexible working processes in light of the Employment Rights Act 2025.
Early advice can often prevent a workplace issue becoming a tribunal claim.
If you require advice on a employment dispute our team can provide clear, practical advice, contact Richard Reed Solicitors on 0191 567 0465 or email [email protected].
