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The other side of Employment Tribunals

Tony Murphy, partner at Harrisons – Business Recovery and Insolvency Specialists, writes in defence of the employer as statistics relating to the number of applications to Employment Tribunals show a substantial fall following the introduction of fees for claimants

Tony Murphy

Insolvency practitioners up and down the country will already know that for many small-to-medium sized businesses, the prospect of having to participate in an Employment Tribunal has always been a grim possibility.

Not only do they have to consider the potential financial cost of the Tribunal, but also the practical disruption it will inevitably cause as they prepare for and attend the hearing. What with senior staff sweating over Witness Statements and worrying about the possibility of having to attend court, Tribunals exert considerable pressure and stress that can easily distract from the important issues of keeping a business in business. The temptation has been to cave in and just get out the cheque book to buy the problem off.

It’s certainly fair to say that tribunals are perceived by many employers as being weighted in favour of the employee and, rightly or wrongly, the odds have always been deemed to have been hopelessly stacked against him or her. This cannot be right and there has to be more balance in the process, both actual and perceived.

In reality, an entire industry has evolved to help employees with their claims – the legitimate, the debatable and the downright dodgy. So, has this become too skewed in favour of the claimant and are we in danger of entering the American model of Litigation Paradise?

Since lawyers’ costs are currently based on Conditional Fee Agreements, employers are finding themselves having to stump up for their ex-employee’s (inflated) costs as well as their own. These can be significant and can push a business to the brink of extinction. And even if successful in defending the claim, the employer can still only recover a token sum of the legal fees incurred along the way, so it’s hardly surprising that many have historically simply thrown in the towel and coughed up rather than fight their corner: this was simply seen as an unpleasant, but unavoidable, part of the price of doing business.

But at last it seems possible that a more equitable arrangement is stealing its way into the system – even if it is arguably still too little to really deter a mischievous claimant; last summer a new fee structure for claimants was introduced requiring employees to pay a minimum deposit of £250 in order to begin proceedings at an Employment Tribunal.

The unions were understandably horrified, claiming that the move would deny workers access to justice and make it difficult to make genuine claims against bad employers. They do have a point and statistics relating to the number of applications being made to Tribunals since last July would seem to verify this, with almost 5,000 fewer claims for issues such as unfair dismissal and discrimination being lodged in the nine months since the introduction of fees on 29 July 2013.

Between January and March this year, claims have fallen a massive 59% and Justice Minister Shailesh Vara has been quoted as saying: “It is not fair for the tax payer to foot the entire £74m bill for people to escalate workplace disputes to a tribunal. And it is not unreasonable to expect people who can afford to do so to make a contribution. As for those who cannot afford to pay, fee waivers are available.”

Wise and measured words on a sensitive issue.

I am sure there are many employers who will agree wholeheartedly with the Minister’s sentiments, sensing an overdue shift in the balance of the scales of justice. For sure, there needs to be equilibrium between the rights of employers and those of the employee and perhaps this is coming to the fore in the light of last year’s legislation. If the unions don’t agree, then I believe they should consider setting up a ‘fighting fund’ for their members to sponsor claims. Such a move would surely allow valid applications to proceed and potentially weed out any spurious ones along the way.

The unions have a real opportunity to help both employer and employee; they have the experience to judge what a valid claim is and can use a bit of common sense when needed to avoid the Tribunal altogether– just as the government’s fees initiative appears to be doing. This has to be a change for the good.

As for those of us in the business of managing insolvency issues, it will be good to have the full attention of management teams at this critical time rather than losing them to the distractions of unnecessary tribunals when they should be focussing on the bigger picture.

While these changes will not necessarily resolve all inevitable conflicts in the workplace, they do – in some small way – rebalance the scales.

Posted on 14th October 2014 by



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