29/03/11
By Stephen Attree, an employment specialist at Myers Lister Price Solicitors
According to The Department for Business, Innovation and Skills (BIS), in the 2009 -10 financial year, administering the employment tribunals system cost the taxpayer £82.1m; up from £77.8m in 2008 - 09.
There were nearly 236,000 employment tribunal claims last year, a 56 per cent rise on the previous year (although the increase was largely due to multiple claims from group actions). Even so, administering each claim cost the taxpayer £343.64.
Businesses, on the other hand, spent an average of almost £4,000 to defend themselves against each claim, totaling close to £1 billion.
The BIS statistics for recent years make fascinating reading for HR professionals and the legal profession. Key points include:
1.Out of the 236,000 claims, only 0.012 per cent resulted in an award being made
2.There were 2,886 successful unfair dismissal claims in 2009/10. The largest amount awarded was £234,549, the average £9,120
3.Race discrimination. There were just 68 successful cases, with awards averaging £18,584 and the highest reaching £374,922
4.There were 150 successful sex discrimination cases, with an average award of £19,499 and a maximum of the highest reaching £442,366
5.Disability discrimination. Only 73 cases prospered but with an average award of £52,087 and a top award of £729,347
6.By comparison, there were just seven successful religious discrimination claims, with an average award of under £5,000 and the maximum under £10,000
7.Where sex orientation discrimination was involved, very few cases resulted in awards. Only 15, with an average value of £20,384 and a maximum of £163,725
8.In age discrimination matters, the results were not dramatic. 28 cases, with an average of £10,931 and a maximum award of less than £50,000
So, settling 3,220 claims cost the taxpayer almost twice as much as the amount awarded - and cost business and industry almost £1 billion.
Disincentive
Many employers take the view that giving such easy access to justice has inhibited business growth. With the potential penalties for making misjudgments about the recruitment of new employees so punitive, it’s not surprising they have been reluctant to grow their workforces.
Employees should receive fair treatment, but there are individuals who are prepared to exploit laws for their own ends. Alongside benefit fraudsters and false disability claimants, there are candidates prepared to seek employment for the specific purpose of entrapping or defrauding an employer by use of the tribunal system.
From the employers’ perspective, the money and time wasted removing such claimants is a burden on business and a discouragement to enterprise.
The cost of reducing the payroll for perfectly legitimate commercial reasons, like fluctuating demand, can become time-consuming and fraught with obstacles when the process results in legal argument.
“Nobody wants to return to the days of summary hiring and firing, with Lord Sugar’s fictional degree of impunity”, says one employer. “This encourages unscrupulous employers to treat employees as dispensable commodities and puts the HR clock back generations.”
True. But, in these tougher times, employers will welcome anything which is going to give them a little more confidence, a little more flexibility and a little more executive time.
Proposals
On 27 January this year, the Government announced proposals intended to cut the number of claims being pursued through employment tribunals.
It is anticipated the BIS will undertake a major shake-up of the tribunal system. The changes are aimed at reducing the cost and time burdens of employment law on companies by extending the qualifying period of employment before which an employee can mount an unfair dismissal claim and by simplifying and speeding up the resolution of disputes.
Two year qualification
Central to the plan are;
1.A controversial policy of extending the qualifying period before which employees can bring an unfair dismissal claim, from one to two years
2.Handing tribunals more powers to deal with vexatious claims
3.Requiring that all disputes go to arbitration before reaching the tribunal stage
The BIS estimates extending the qualifying period to two years would reduce the number of claims by around 3,700 - 4,700 a year, benefitting employers to the tune of £14.8 - £18.8 million per annum in costs.
Business lobby groups have also been pressing the Ministry of Justice to consult on the passing of measures which introduce fees for claimants to bring cases before an employment tribunal. Charging a fee would bring such cases in line with the civil and family courts, as opposed to the present arrangement where the cost of employment tribunals falls wholly on the taxpayer.
The Government is set to launch a more detailed consultation on the issue in the spring, to measure the impact such a fee mechanism would have. While its overall objective seems to be the introduction of a simpler, more transparent, cost-effective system, the full ramifications need to be fully understood. Any proposal to reduce delay is to be welcomed, but not at the expense of infringing rights of workers who have been unfairly treated.
As business secretary Vince Cable commented, "Disputes in the workplace cost time and money, can affect morale, reduce productivity and hold back businesses. We often hear knife-edge decisions about whether to hire new staff can be swung by concerns about ending up in an employment tribunal if things don't work out. These proposals should give employers more confidence."
Not everyone agrees. Claimant lawyers and trade unions will argue these proposals are politically motivated to demonstrate empathy with the business community. They say the changes would reduce access to justice but the assumption that the scales are loaded in favour of employees is a misapprehension. A minute proportion of claims end with an award being made and the proposals make very little difference.
It seems to me reducing the 236,000 claims a year by 3,700 — 4,700 would make minimal difference. Statistically, this would be about four less individual cases each year.
Of course, simply using a fixed, arbitrary time period to deny the right of ‘not to be unfairly dismissed’ to a section of the workforce is considered, by some, to be regressive. Why two years? Unfair is unfair, what’s time got to do with it? Making unfair dismissal claims only possible after two years of employment may give those employers who are looking to cut corners a free hand to do so.
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