The British Chambers of Commerce (BCC) has undertaken research which shows that the average cost for an employer to defend itself at an employment tribunal is £8,500 whereas the average cost to settle is £5,400, making settlement the cheaper option. Last year there were more claims made than ever (236,100) and the current recession is unlikely to lead to anything other than a further increase this year.

The extent of disruption for employers who have to deal with an employment tribunal claim cannot be overstated. While most employers feel that they are able to answer the claims made the majority (51%) settle claims nonetheless in order to keep costs down and because it is convenient to do so (25%). While costs can be awarded against claimants who bring obviously unmeritorious claims, the number of these orders made is miniscule in comparison with the number of claims made and has decreased every year since 2004/05.

Dr Adam Minshall, Director of Policy and External Affairs at the BCC commented:

“The employment tribunal system is in dire need of reform. Currently, tribunals are too slow and overwhelmingly weighted in favour of the employee – whereas they should be fair for employers and employees alike.

“Small- and medium-sized employers across the UK tell us the current tribunal system creates risk and uncertainty. Ultimately, it’s a barrier to job creation because it distracts businesses from focusing on growth.

“The current system is perverse – forcing businesses to settle spurious claims rather than fight them, simply because it is more cost effective for them to do so. And those costs go beyond legal fees. The reputational impact of a tribunal can be hugely damaging to a business, particularly as they can be stretched over several months.

“We urge the Government to review the current system and consider introducing a fee for claimants to discourage spurious and baseless claims. Ministers must also commit to reducing the wait time for a first hearing – and making the system less of a barrier to business growth.”

Our experience shows that his assessment of delay and bias is correct. It is very hard for employers to avoid some technical defect or another which leaves them open to successful claims by claimants even though they have what they believe to be a thoroughly fair approach to employment relations. Many employment lawyers don’t grasp the nuances of how to deal with what has become an incredibly technical and complex area of law so it is hard to understand how employers themselves can reasonably be expected to understand what is required. Even employment judges have difficulty in grasping the issues as demonstrated by the number of successful appeals. As I’ve pointed out before it is remarkable that most claims in employment tribunals involve more complex legal issues than those dealt with in our civil courts but that is the reality. Whether that should be so is of no help to employers who have to deal with the legal system that we have.

That is why employers simply cannot rely on the outdated view that they haven’t encountered the claims which need to be dealt with by others and therefore don’t need to worry. An employment tribunal claim can cause untold inconvenience in terms of time, disruption and unexpected expense. It’s worth bearing in mind that many of the awards which can be made in tribunals are unlimited and can therefore cause the failure of otherwise successful businesses. Should this be the case? The government knows about the problem so there are headlines such as “Firms get powers to sack the slackers” and an “Employers’ Charter” which presage an extension of the time limit for bringing an unfair dismissal claim from the current one year to two years and the requirement for claimants to pay a fee for bringing an employment tribunal claim. Proposed fees are suggested as being in a range from £30 to £500 (according to the Financial Times) but the absence of legal aid for employment claims means that these proposed changes will be vulnerable to “access to justice” arguments.

These issues mean that employers cannot responsibly take the chance that they will get away without claims being made against them. It’s more important than ever to make sure that documents, policies and procedures are right up to date and that is how CLB Employment Solutions comes into its own. Our access to specialist employment lawyers removes the onerous requirement on employers to make sure that all their arrangements for employees are correctly drafted and up to date and that potential problems which arise with employees are dealt with properly and with a minimum of risk. Subscribers can also opt to obtain reasonably priced insurance to guard against both legal costs and awards of compensation. Can you afford not to have appropriate cover in place? For further information about our comprehensive employment law and insurance service please call free on 08000 320 974 or email enquiries@clbemployment.com.

2 Comments

  1. I’m not surprised at all by the figures quoted here and firmly believe that the amount of claims will continue to increase over the next 12 months. The introduction of the Equality Act 2010 has raised the awareness of employees as to their rights and even increased them. Employers need to ensure they take preventative measures (advice from lawyers as soon as any issue with an employee arises) as once the claim is issued it will cost them no matter how it is concluded.

  2. It is my belief that an introduction of these fees to lodge a claim with the Employment Tribunal will have little effect on detering would be Claimants from lodging a claim and persuing their matter.

    A means tested fee remission application will no doubt be adopted to enable those who cannot afford the fee the ability to lodge a claim.

    In a sense one may perceive that the introduction of these fees is an effort to decrease the overall cost of the Employment Tribunal service to the state purse.

    In my opinion the number of claims at the Employment Tribunal will not decrease, and the trend of bringing the employer to a Tribunal will continue to become ever increasingly popular.

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