As many readers will have seen, there has been wide-spread comment in the press over the past few weeks on the current state of the Employment Tribunal system, together with suggested reforms.
Much of this comment was triggered by the publication by the British Chamber of Commerce (the BCC) of a report at the start of the year, which found that the average cost to an employer of defending itself at Tribunal is £8,500; and the average settlement is £5,400.
Commenting on those findings, the BCC’s policy director said that the Employment Tribunal system was in “dire need of reform” and that it was “perverse” – because it forced businesses to settle spurious claims rather than defend them. The conclusion of the BCC’s research was that the main reason employers chose to settle was cost – not because they thought they would lose the claim. The BCC went on to call for a review of the current system and urged the government to consider introducing a fee for claimants to lodge a claim at Tribunal.
The suggestion of the payment of a fee to commence Tribunal proceedings has already generated debate about access to justice, and is something upon which the Government is likely to consult as part of a broader consultation on the current Tribunal system. It was last November that the Government’s then enterprise adviser announced a review of enterprise policy. There was also a suggestion that the period of time employees must have worked before they can bring a claim for unfair dismissal should be increased from one year to two. As yet though there are no formal recommendations on proposals for reform and no formal consultation period has been launched: we will cover any developments in future bulletins, so watch this space!
The suggestion of an increased qualifying period for unfair dismissal claims might at first glance appear attractive to employers; however, the risk would be that such a move might encourage claimants to bring unmeritorious discrimination or whistleblowing claims, for example, as these do not require a minimum period of service. And whilst the maximum value of an unfair dismissal claim is itself far from insubstantial (with compensatory awards up to £65,300, rising to £68,400 for dismissals from 1 February), some categories of unfair dismissal claim and discrimination claims attract unlimited compensation.
A piece in the Times earlier this year referred to the Tribunal system as “legalised extortion” of employers by employees. Whilst most would agree that this is taking it too far, it is true that there is currently little deterrent for claimants in bringing weak claims because while provisions do exist for employers to reclaim their costs, in practice it is extremely rare for costs orders to be granted. Even where such an order is made, there remains of course the practical question of whether or not a claimant will (or can) pay up.
Many of the BCC’s findings were not new: the suggestion about a fee, or deposit, for claimants to lodge a Tribunal application was first made by the BCC in a previous report it published. Some of the detail of this year’s report was based on a survey carried out by BIS in 2008, and from the data in the annual reports published by the Employment Tribunal Service over the past ten years. However, many employers will nevertheless be encouraged by the BCC’s stance on the Tribunal system, especially so in these still difficult economic times.