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Falling employment tribunal claims

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The Ministry of Justice has published its annual employment tribunal stats (compiled from 1 April 2011 to 31 March 2012) - showing a marked drop in total number of claims. But could the fact that many employers choose to settle early rather than fight a c

The government continues to lash out at employees' rights - slashing top-up benefit payments for low-paid workers who go on strike from 2013 being just one of many recent rug-pulling exercises by the DWP. In light of these recent figures, is it time for the government to end its crusade against employee rights or is this burning of red tape a step in the right direction to help small businesses and stimulate growth?

Despite what may appear as a crusade against the rights of workers, employers have for far too long wasted time, money and effort dealing with weak and unjustified claims brought by employees. The public purse suffered as the number of tribunal claims rose steadily, sometimes dramatically from 2005 onwards. Weak and vexatious claims were rewarded with compensation as businesses made the commercial decision to pay out and move on. In response, amidst cries that reform of the country’s employment law landscape will simply benefit employers behaving badly, the government continues to sharpen its scissors in its battle against red tape and a mountain of employment legislation which has become a little too one-sided. 

Critics claim that only businesses that fail to act fairly and reasonably risk a lawsuit. Unfortunately this is far from always the case and harsh as it might seem, it is about time that employees were asked to share the risk as well as the reward of making an employment claim.

The latest annual employment tribunal figures from the Ministry of Justice showed a 15% reduction in the overall number of claims. Although some individuals might have been put off bringing and pursuing claims due to well-publicised recent and proposed changes to employment law, the fall is much more likely a reflection of how businesses are settling more workplace disputes at an early stage.

The unpredictable and costly nature of employment claims has for a long time been encouraging management to settle disputes outside the Employment Tribunal. In challenging times, that incentive has grown more pronounced; not least in discrimination claims where there is no upper limit on the potential level of compensation.

It is in this light that employers are now backing a proposal to make it compulsory for employees to quantify their claim when they submit it. This would allow employers to make a commercial judgment on whether or not to settle at the earliest possible stage. Such a scenario is not only attractive for employers; it would reduce the number of claims proceeding to court and could save some individuals from wasting time and effort fighting a losing battle.

As it stands, there are no significant drawbacks for former employees to bring an employment claim – regardless of how spurious it might be. In fact, many organisations make a commercial decision to settle a claim simply to do away with the nuisance and effort of being involved in a legal dispute. Unfortunately, this approach might to some extent have played a part in encouraging weak and vexatious claims. As such, it is both sensible and necessary that claimants will have to pay substantial fees out of their own pockets to bring a claim.

The government claims that fees are being introduced to help fund the tribunal system, but in reality the objective appears to be focusing the minds of potential claimants and weeding out spurious claims. Understandably, employers are hopeful that such fees will reduce the number of claims – allowing valuable time and finances to be spent managing and growing the business instead. And it is in the same vein that proposals have been put forward for claimants to have to pay a £500 deposit if their case is deemed unlikely to succeed. But is it not reasonable to expect a person to carefully consider the strengths and weaknesses of their case? Surely this should be the very first consideration by any claimant.

The Employment Tribunal remains readily accessible to potential claimants but the government’s reform of employment law will help to re-balance employee rights with commercial interests. The beneficiaries will be both employers and the taxpayer.

Of course regardless of what the government comes up with next, prevention remains the most effective line of defence for employers. Establishing effective workplace policies, training staff and consistently implementing robust internal processes will always help reduce the number of employment claims.

Source: The Yorkshire Post, Monday 6 August 2012

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