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Incentives to recruit and Employment Tribunal deterrents

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There have been murmurs that the Government is proposing to introduce issue fees in the Employment Tribunals at a cost to Claimants of £30-£500. This sum would be refundable should the employee win the case.

There have been murmurs that the Government is proposing to introduce issue fees in the Employment Tribunals at a cost to Claimants of £30-£500. This sum would be refundable should the employee win the case. 

The Government has also indicated that it plans to increase the length of time an employee has to work for an employer before being able to bring an unfair dismissal claim from 1 to 2 years. This proposal should allow employers a longer period to determine whether employees are suitable for the role or, to be more cynical, dismiss them unfairly or without following a comprehensive procedure!

The Government’s aim in introducing these measures is to encourage employers in the private sector to recruit at a time when the public sector is proposing substantial cuts.

These proposals have inevitably caused outrage amongst trade unions and Claimant employment lawyers. In contrast, they are supported by businesses who view them as some relief in a climate were they may have been facing a significant increase in the number of Employment Tribunal claims from former employees who have much more to lose in the current economic climate.  

The Tribunal system has, for a long time now, been criticised as being biased towards employees, time consuming and expensive. The current system allows an employee to bring a tribunal claim and an employer to defend a claim free of charge and neither party has to pay for the Tribunal’s time or that of an ACAS conciliator.

Some claims are brought by employees, even though there is little merit to them, because there are no up front costs. They proceed in the knowledge that because of the legal costs and hassle an employer faces, it may well make a commercial offer of settlement.

The aim of introducing issue fees is to deter Claimants from bringing vexatious claims or claims with little or no prospects of success, thereby reducing the burden on employers.  The prospect of a fee will at least ensure that Claimants evaluate the merit of their complaints.

Although there is legislation in place which empowers the Tribunal to order costs, it is rarely awarded, unlike the civil courts. If an employer loses the case or decides to settle the matter before a Hearing, they have to pay out to the employee.

More alarmingly if they win the case, an employer will still, in most cases, have incurred considerable legal costs in defending the claim which will not be recouped. At the moment employers are in a lose/lose situation.

The proposals are a step in the right direction in trying to promote employment in a difficult economic climate but it remains uncertain whether they will achieve this aim without prejudicing Claimants who have been treated unfairly and cannot afford to fight back.

If issue fees are introduced then a fair system must be put in place ensuring that the fee is not ineffectual by being too low and not too high, so as to prevent access to justice.  

If the qualifying length of service to bring an unfair dismissal claim is increased employers should be encouraged to act responsibly in implementing their recruitment strategy and be mindful that there are a host of tribunal claims which can be brought without the need to accrue any service!

Article featured in The Yorkshire Post, 25 January 2010