Employers who believe they have protected themselves against a raft of recent employment litigation may be forced to EAT their words if they have not paid attention to the latest case law judgments.

It follows major changes on the minimum wage, holiday entitlement, maternity leave, and much more.

Law firm Challinors is warning Employment Appeal Tribunal (EAT) decisions are set to introduce new guidelines for workers’ rights and employers’ duties.

And businesses that fail to recognise the implications could open themselves up to significant fines and legal costs.

Simon Bond, partner at Challinors and member of the Black Country Chartered Institute of Professional Development, said: "Employment law is a complex and changing area of the legal system and it is essential that employers recognise the importance of individual case judgments as well as legislation.

"In the current market, employers must be on the alert for any ambiguities that could result in litigation as many businesses simply cannot absorb the costs.

"For example, a business undergoing a restructure including a redundancy consultation would benefit from having followed the recent case of Harris v Ralph Martindale & Co. Ralph Martindale suffered from a decline in orders and was forced to reorganise its business and remove a layer of management.

"Mr Harris, the claimant, and another employee were warned that their jobs were at risk, leading to them both applying for an alternative role in the company which had been internally advertised.

"The job was offered to Harris’s colleague due to the fact that he had a ‘less insular management style’. Harris appealed this decision on the basis that the selection process was not objective and the tribunal upheld his claim.

"By failing to provide a job description that set out the objective criteria for the new role and by opening up to other internal candidates before establishing that the two redundant employees were not suitable, Ralph Martindale had left themselves open to litigation and the cost of paying out a substantial award to Harris.

"The case has imposed an extra burden on employers, who now must ensure that any redundancy criteria are objective and that employees at risk of redundancy must be offered any suitable alternative roles before they are advertised, even internally."

Mr Bond went on: "It is easy for employers to fail to recognise the widespread implications of such cases, as so many of the facts seem to be unique to the individuals and companies involved. However, it is essential that employers learn from the mistakes of others and use these cases to review their own HR systems, identifying any potential problems before they result in a legal battle."

Already in 2008 there have been a number of judgments in employment tribunals with substantial implications for employment law. A further example is Stringer v Her Majesty’s Revenue & Customs, which raised controversial questions over whether employees on long term sick leave accrue holiday pay.

After conflicting judgments from the employment tribunal, employment appeal tribunal, the House of Lords and the European Court of Justice, the Advocate General provided new guidance in January. This stated that a worker on indefinite sick leave is entitled to designate a future period as paid annual leave during a period that would otherwise be sick leave. However, the annual leave cannot actually be taken until the employee returns to work. Meanwhile, if an employee on long term sick leave has their contract terminated then they must receive payment in lieu of their leave entitlement.

Mr Bond continued: "We really cannot underestimate the significance of case law.

"It is true that the amount of new guidance and legislation coming forward can seem like a minefield to employers, but they are also invaluable tools.

"The stories behind individual disputes can highlight ambiguities in the system and allow us to address them, protecting both employers and employees. While employers should not panic, they should watch the judgments coming forward closely, consult with their HR department and seek legal advice where they think they could be at risk. A little preparation now can save costs and help with the stability of the business in the future."