Employee cocktail claims on the rise

Minter Ellison's Gordon Williams advises employers to pre-empt potential cocktail claims

There has been an increase in the number of ‘cocktail claims’, in which employees bring one action comprising multiple claims against their employers, according to law firm Minter Ellison

“Managing employee cocktail claims can be a difficult, lengthy and very expensive process, so be proactive and avoid unnecessary risks,” said Gordon Williams, employment lawyer and partner of Minter Ellison.

In a recent seminar hosted by Big Fish Global Consulting Group, Williams communicated the need for employers to mitigate and minimise risks surrounding employee cocktail claims.

He said less is more when it comes to employment contracts and advised employers to avoid pigeon holing themselves legally.

“Pull out your employment policy and see what it says about performance management,” he said.

“If your workplace is going to have a first, second and third warning system, structure your policy in a way that says generally, we give three warnings, but we reserve the right to skip the process, depending on all the circumstances.

“Larger and more specific policies create more problems than they solve. If you have a more flexibly worded policy, you acquire more room for movement in a dispute.”

“Giving negative feedback is one of the hardest things to do; not many managers are sufficiently trained in how to handle such difficult conversations”

It is also important to know your legal obligations, and Williams cautioned employers against including motherhood statements like “we are a fun place to work” or “you will not be bullied”.

“Such claims are nice to say or hear, but they may be used legally against you in the future,” said Gordon.

“These types of statements are not necessary; all that legislation requires is for you to deal with issues as a reaction, not guarantee that ‘there is no bullying” in a legal document.

“Every employment contract contains an element of trust,” said Williams, who noted that in order to minimise risk, employee contracts should exclude implied terms of trust and confidence, limit damages, exclude policies and exclude pre-contractual representations.

Williams also underscored the importance of training and compliance at a managerial level, given “80 per cent of workplace complaints come from performance management.

“Giving negative feedback is one of the hardest things to do; not many managers are sufficiently trained in how to handle such difficult conversations,” he said.

“Ensure leaders are educated about adverse action and discrimination, and provide training to managers around feedback, bullying and performance management. Keep everything documented for legal reasons.”

He advised companies to choose their best investigator carefully, as individuals who have been closely monitoring or involved in the performance management process may be seen as biased in legal proceedings.

“You may not have to spend lots of money on external investigational consulting; is it worth up-skilling other people in your organisation?” asked Williams, who also advised considering early resolution and potentially aiming to resolve claims as quickly as possible.

He said it was important to review policies and that it may be beneficial to edit clauses to protect the organisation.

“For example, writing ‘in the event of a contract breach, the maximum damage that an employee can claim is that of a notice period’,” said Gordon.

“It’s about planning to put yourself in the best situation as a result of the preparations you have made.”

By Alexander Robertson