Tribunal reforms win business backing

Business groups have welcomed proposed government reforms to employment tribunals, saying soaring claims from employees have hampered growth and become too costly for companies to handle.

Business secretary Vince Cable says the changes will ‘debunk the myth’ that employment is geared toward the employee over the interests of the employer.

According to the Department of Business, tribunal claims rose to 236,000 last year – a record figure and a rise of 56 per cent on 2009 – and a business has to spend almost £4,000 on average to defend itself against a claim.

The department adds that concerns have been raised by businesses that the system has become too costly, takes up too much time, places unnecessary strains on growing businesses and that it is too easy to make unmerited or vexatious claims.

Proposed changes include increasing the minimum amount of time an employee must have served at a company before bringing a claim from one year to two years; the introduction of charges for employees wanting to take action against their employees; and, a restructuring of the process so that all claims are lodged with conciliation services Acas.

An Employer’s Charter will also be published to help employers understand their rights and responsibilities in managing staff.

Cable comments, ‘In the business world there is also a common misconception that employment protections are all one-way – towards the employee. The charter we are publishing today tackles this myth by setting out clearly some of the most important rights that employers already have in the workplace.’

CBI director-general designate John Cridland welcomed the reforms, saying: ‘For far too long the tribunals system has put the interests of lawyers above those of employers and employees.’

Adds Cridland, ‘It is in everyone’s interests that disputes are resolved swiftly and fairly. Introducing an element of charging would help weed out weak and vexatious claims, clearing the way for more deserving cases to be heard. Extending the qualifying period for unfair dismissal is a positive move that will give employers, especially smaller ones, the flexibility and confidence they need to hire.’

The Chartered Institute of Personnel and Development (CIPD) also backs the Employers’ Charter and the increased role Acas will play, but warns increasing the period of time before staff can claim unfair dismissal is unlikely to bring about any significant reduction in claims.

CIPD employee relations adviser Mike Emmott comments, ‘Many claims for unfair dismissal are also linked to discrimination claims which are not limited by employees’ length of service. There is also a danger that the two-year threshold might be held to be sexually discriminatory as the turnover rate for women is higher than that for men.’

Barlow Robbins employment solicitor Andrew Peters agrees that increasing the non-claim period, which would effectively mean a return to the law before reforms in 1999, would have little effect on limiting frivolous cases but introducing charges may deter weak claims and help free up tribunals.

He comments, ‘There are without a doubt a huge number of tribunal claims that are brought which have little or no legal merit at all.  Many employers choose to simply settle such claims for a nominal sum to avoid incurring significant legal costs.

‘I firmly believe that many individuals with weak claims would be deterred from proceedings [by fixing a charge]. A fee may also allow employers to concentrate on running their business. However, a balance must be struck between discouraging the pursuit of hopeless claims and pricing legitimate claims out of the tribunal system, as many of those sacked simply have no resources to pay.’

Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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