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3 Reasons Why You Should Consider Outsourcing HR And Avoid Employment Tribunal Fees

As people lose their jobs, same way businesses shutdown daily due to financial factors such as high running cost. Outsourcing some sort of functions of the company has become more popular way of reducing business overheads. Some would argue that its more expensive if you are a small to medium sized company to outsource certain functions such as the IT department or logistics.

Businesses can almost outsource anything which isn't strategic to its core of it's business. Most companies now outsource their Accounting and IT department. No doubts you can cut your overhead cost by outsourcing but would it be cheaper to outsource the HR department? After all, you may be able to do with just a single personnel handling the HR side and also double as your administrator. One can really suggest that if its a small company, you can get by recruiting just one person dealing with the HR side of the business.

Reasons Why You Should Outsource Your HR Function.

Save on Salary

Let’s start with the obvious one. Outsourcing your HR simply means you are paying someone to take on the responsibility of that business function for you. For a large company, it may be a big savings on salary but it may also be savings for a small business as well. Most outsourcing companies offer packages that adjust fees in relation to number of employees.
With outsourcing, businesses could save a large percentage of cost that could have gone on wages, holiday, bonuses and pension. This is one of the main reasons why outsourcing is becoming more popular in the business world today.
Businesses do not save only on wages and other cost like holiday, pension, there is also the savings on training cost associated to new entrants. There is the learning phase for new employees which can be accounted for. This is saved when the department is outsourced.

Outsourcing HR duties often increases efficiency

Some firms who have outsourced their HR function, as part of the HR services outsourced - is the hiring and training duties. This allows the business to focus on its core functions, not losing energy and time on screening of prospective employees or conducting interviews.
Recruitment can be expensive if you put a cost on efforts on getting the right candidate for your post. The hiring cost to some businesses is not why they have outsourced that side of the HR; they will rather use their time resource on other areas of their business.
The resources saved on hiring and training can be used on other areas of the business which often leads to efficiency. Business can focus more on other strategic area of the business such as business opportunities and threats, profits and any business change needed for company growth.

Outsource Your HR Functions and Avoid Employment Tribunal

Let me get this out first, outsourcing your HR will not guarantee that your employee will not take you to the employment tribunal. If you do end up at an employment tribunal, it may not reduce your legal fees. There are no guarantees when it comes to employee discontent. However, you do not want to be at the wrong side of the law. Those who have been on that end have paid heavy cost for non compliance.

Many claimants have won their employment tribunal claims simply because the employment laws have not been followed. You may think you have recruited one of the finest graduate in human resources but when it comes to employment tribunal, firms not only need those who know the law, they also need experience and experts in dealing with employee – employer relationship.

An employment tribunal case that comes to mind is the Ramphal v the Department for Transport (DfT). This case is a very good example that even an experienced HR manager, could also get it wrong. The case tells how the HR should be involved in disciplinary proceedings in a workplace. It shows how easily HR can also get it wrong.

It is vital that businesses get this right. You may think you are saving by having a single member of staff has the HR officer and manager but you could lose thousands in an employment tribunal claims for various reasons not limited to unfair dismissal, constructive dismissal, redundancy, discrimination claims. Employee can take you to court even on holiday pay calculations or failing to make reasonable adjustments.

Most often, you pay not just the legal fees and the employment awarded cost, it could also lead to subsequent claims from other employees. There is no price for the emotional stress of having to attend an employment tribunal hearing.

Finally, most business operates to make profits for its shareholders and the decision to outsource any resources lies in their hands. Even when you have decided to outsource your HR duties, you need to get it right. Do your findings to make sure you are in good hands. Do not outsource just because it’s cheaper than the next one. Don’t pay the price you tried to save in the first place.

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