Whatever the benefits for employees, complex employment laws spell risks for employers who can easily — and unwittingly — fall foul of them.

“Radical changes are prompting more organisations to offer legal services directly to the business community and the public,” says Richard Cohen, CEO of the Epoq Group, which provides online and telephone legal support on employment matters. While service companies such as Peninsula, Epoq and Croner are established providers of advice on employment law and health and safety issues, professional law firms, too, are now offering more consumer-friendly, competitive products.

With in-house HR legal professionals costing £50,000 a year or more, and normal hourly rates for employment lawyers being anything from £200 to £400, outsourced employment law services can provide efficiently delivered advice and cost savings.

“We take more than 9,000 calls a week from clients,” says Peninsula’s managing director Peter Done. The UK’s largest personnel, employment and health and safety consultancy, Peninsula offers a range of support, from drafting employment contracts, to a helpline, to representation in employment tribunals. “We find out how clients work, get the right documents in place and update them to comply with changes in the law.

“We can also monitor information on all employees, such as absentee rates, and we provide reminders for key dates,” says Done. “Many of our clients are small to medium-sized businesses that don’t have HR departments, but we also have a section that serves larger companies. These may have their own HR department but might not be specialists in employment tribunals, for instance,” Clients pay over a one, three- or five-year period. Charges are based on the number of employees and usually amount to about 1% of the payroll or less, Done says.

“Many people don’t realise what information and support there is out there in terms of standard forms and agreements that you can use,” says Wayne Barnett, managing director of Actinium Limited, of the legal support services available.

Barnett’s company provides management services for more than 500 limited companies run by IT consultants, and has 25 staff in London. Actinium’s in-house solicitors specialise in information technology so the company uses Epoq’s Businessmax, a telephone and online legal support service, for its human resources needs.

“We use the Businessmax service for everything from making offers of employment and employment contracts to disputes and terminations,” explains Barnett. Actinium prepares documents using Businessmax’s standard templates, amending them as necessary with the interactive service, then has them checked by Epoq’s lawyers.

Businessmax costs his company £299 a year — or little over the cost of an hour of a specialist solicitor’s time.

Several years ago, law firm Blake Lapthorn Tarlo Lyons launched Vigil — its employment law and HR support service. “Our smallest client has three employees, our largest has 16,000,” says Gillian Leach, the firm’s partner responsible for Vigil.

The service starts with getting clients’ employment documentation in order and its member website offers plenty of information on the legal aspects of a range of employment law matters. Members receive updates on new laws, annual seminars and personal visits by solicitors.

Vigil’s costs are based on the size of a client’s payroll; its minimum cost is usually about £2,000-£3,000 a year. Leach claims clients using Vigil have a low incidence of claims — not because the advice is overly cautious, but because issues are attended to at an early stage.

“Usually you can export some risk, as outsourcers should be responsible if they fall foul of the law when providing their services,” says Kevin Barrow, Leach’s fellow partner at Blake Lapthorn Tarlo Lyons. Vigil, like Peninsula and other advisers, guarantees its services, insuring its clients against tribunal costs and awards if its advice is followed but is unsuccessful.

Nicholas Lakeland, an employment law partner of London law firm Silverman Sherliker, says: “These providers offer good support if you have a lot of employees and need basic help. But make sure you know what you’re buying and how the responsibilities between you will be divided up.”

At Peninsula, all advice provided by the company is recorded and is available for its clients’ managers.

Companies also face the risk of line managers ignoring the service. Barrow says: “If line managers don’t have a good relationship with an HR outsourcer, they can disregard them and fall foul of the law. This can happen whether an outsourcer is used or not, but there’s an argument that they may respect someone who is an external, paid specialist.”

“This can happen — especially in big companies,” Done admits. “If they do their own thing and the matter ends up in a tribunal, our policy is that we’ll still stand by them, pay their tribunal costs and provide our advocacy team to help, but we don’t guarantee an award.”

EAPs

Employers facing claims by staff for stress-related illnesses might want to invest in employee assistance programmes (EAP).

Five years ago, financial management company Merrill Lynch appointed health-services group Bupa to provide an EAP for its UK and Irish staff. “We want our employees to be present in the job and the service helps reduce medical costs overall,” says Ian Luke, Merrill Lynch’s benefits manager.

Bupa’s 24-hour toll-free helpline covers work-related, personal and legal issues. Basic advice is provided by counsellors, who refer employees to specialists when needed.

Merrill Lynch reckons the service, which is used by 1%-1½% of its employees, costs about £6 per employee a year.

Times Recommends

• Inspirational leadership
• How to get a new job
• The reluctant CEO