Employment Tribunals in need of reform ?

Statistics suggest that only one in ten employment tribunal cases result in an outcome favourable to the employee. This however is of little solace for employers who often end up paying high legal costs even where claims are defeated and so many opt to settle claims before they reach Tribunal, which in turn potentially encourages

Home » Employment law » Employment Tribunals in need of reform ?

Statistics suggest that only one in ten employment tribunal cases result in an outcome favourable to the employee.

This however is of little solace for employers who often end up paying high legal costs even where claims are defeated and so many opt to settle claims before they reach Tribunal, which in turn potentially encourages more employees to make claims.

Cases brought to employment tribunals

Claims need to relate to employment, examples include claims for:

  • Discrimination on the grounds of race, age, sex, religion, disability or sexual orientation
  • Breach of contract
  • Unfair dismissal
  • Wrongful dismissal (it is a claim for a breach of contract where the employer fails to provide an employee with a notice or provides an employee with an insufficient amount of notice or payment instead of a notice).
  •  Constructive dismissal (when an employee resigns from the job because the employer’s behaviour has left them no other choice)
  • Redundancy payments (or not being consulted during a redundancy procedure)
  • Equal pay (claim can be brought while still employed)
  • Not being allowed to be accompanied at a grievance hearing
  • Unpaid wages
  •  Not receiving sick pay

Current situation

According to some, the system is balanced in favour of employees, which results in many settlements in unfair dismissal claims under £10,000. 00

Employers tend to settle disputes before they reach the tribunal in fear of every dismissal of an employee leading to a claim in unfair dismissal or discrimination and based on the fact that even if a claim is defeated at Tribunal, the cost of defending the claim will be prohibitive and there will be no costs order against the claimant. Consequently, it may be better to make a business judgment to settle the claim.

There are many examples of cases where even though the claims were rejected or an employee has committed an act of a gross misconduct, the employer still lost money in legal costs.

Costs

The cost of defending a claim in the employment tribunal is estimated at an average of £8,500.00, which can be quite a significant amount of money for a small business.

 Reforms needed ?

The current system is believed to be in need of reform in order to benefit individuals as well as businesses. A survey amongst members of the Institute of Directors shows that half of them have been stopped from hiring new employees because of the trouble which future claims might bring.

According to the IoD survey, most  directors would be happy with the introduction of the no fault compensation dismissal and see it as having a positive effect on their business and the economy as a whole.

 No fault dismissal: the future?

Consultations are currently taking place to decide whether removing unfair dismissal and replacing it with no fault dismissal can in fact help the economy. It seems that the complexity of employment law itself cannot be blamed for lack of growth of small and medium enterprises. As Mr Cable stated, there must be sufficient evidence to support the theory of no fault dismissal being more balanced for the benefit of the businesses without taking away the protection to employees. Quite how this would work is also open for serious debate.

Perhaps the best way of reducing tribunal claims would be to impose court fees to start a claim and remove the no costs rule in the Tribunal, but this would be a controversial and politically risky move which could alienate a significant number of the workforce who are after all voters…..

Employment law

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