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Employment Tribunals

01 June 2001

Andrew Masters, employment solicitor with Canterbury based Furley Page, examines the growth of employment claims and the reform of employment tribunals.

The business community has been concerned for some time by the escalation in the number of claims being brought at employment tribunals. The most recent report of the Advisory, Conciliation and Arbitration Service (ACAS) reveals that applications to employment tribunals rose by 32% in the 12 months to 31 March 2000.

For a business, the costs and time in defending even a weak claim can be large. There can also be lasting damage to a business's reputation given the public nature of a tribunal hearing. This has led in many cases to businesses preferring to settle a claim prior to the hearing on a 'commercial basis' regardless of the merit of the claim.

There are several reasons for the increase including:

  • There is a growing compensation culture. Applicants now appear to be more aware of their 'rights' and more willing to bring a claim in the hope of gaining a cash windfall. This has been fuelled by increases in compensation available to successful applicants at employment tribunals.
  • Recent years have seen a significant increase in new employment laws from Europe and the UK. Examples include the implementation of the Working Time Regulations, the reduction in qualifying service from two years to one year for unfair dismissal claims and new laws on disability discrimination and part time workers. Human resources policies and procedures are now determined within a more complicated legislative framework.
  • There has been a move towards 'employee' status. This has meant that many workers who were previously classed as self-employed contractors are now considered to be employees and enjoy the intricate web of legal protection available to them.
  • The funding of cases has also become easier for applicants. There has been a growth of firms offering conditional and contingency fee arrangements (commonly called 'no win no fee'). The Government has also been keen to encourage more funding for public organisations such as the Citizens Advice Bureau. Consequently with the growth of IT, information is more readily available for an applicant wishing to bring a claim.

Key Proposals for Change

The Department of Trade and Industry has also been concerned by the growth in claims and the overburdening of employment tribunals. Its response has been to introduce proposals for the reform of tribunals. The measures are designed to strengthen and improve the system while imposing greater deterrents and penalties on spurious cases brought by applicants.

The key proposals that are likely to be introduced in July 2001 include:

  • A new power for tribunals to strike out claims or defences without a hearing on the grounds that they have 'no real prospect of success'.
  • Tribunals can at present impose cost penalties at a hearing against a party who brings a misconceived or unreasonable case or defense. Generally speaking, the sanction is rarely used and when used the penalties are nominal. Under the new proposals, the amount that can be awarded at a hearing is to be increased from £500 to £10,000, which is more likely to prove a deterrent to an unreasonable litigant.
  • The tribunals are to be given powers to strengthen the management of cases and to become actively involved at an early stage. This should lead to a more efficient service assisting all parties in the case.
  • From February 2001, there has been an increase in the deposit payable in 'weak' cases from £150 to a maximum of £500. The deposit might be required after a pre-hearing review where a party wishes to pursue a case or defense after a tribunal has concluded that it has 'no reasonable prospect of success'.
  • Alongside these changes, the ACAS Arbitration Scheme for the resolving of unfair dismissal disputes only is likely to be introduced in the near future. This will provide a voluntary and confidential alternative to an employment tribunal. It is worth noting that unfair dismissal cases currently account for 43% of all claims brought at tribunals.

The Future

Generally speaking, the business community has welcomed the reform proposals. By allowing tribunals to strike out those cases that have no real prospects of success and with a greater potential to impose cost penalties against unreasonable litigants, it is hoped the reforms will reduce the number of unmeritorious cases being brought or defended. Greater case management powers by tribunals should also improve efficiency and reduce the clogging up of the tribunal system. As important, the reforms should help and not deter the genuine applicant with a legitimate claim.

For more information please contact Andrew Masters, Partner & Head of Employment.
 

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