'Reforming' employment tribunals

7 September 2001 - The Guardian (5 September 2001) reported rumours that the government would drop the proposed charge for applications to employment tribunals in the recent reform package. John Cridland, Deputy Director-General of the CBI, said: "Everybody agrees that we need to cut the number of disputes ending up in the courts unnecessarily. Companies support the fee as part of a balanced package that puts responsibilities on both employers and employees.

"If the government were to drop the idea of a charge, it would be even more essential to find other ways of resisting abuse and avoidable use of the system in a punt-for-cash culture. Otherwise ministers could fail to reduce unnecessary tribunal cases."

Cridland added: "People who take out litigation need to recognise that there is a cost to the employer and the tax payer. Employees should share some financial responsibility. That is why other civil courts make a charge including the small claims and county courts. As long as proper account is taken of people on low incomes, charging does not limit access to justice."

In the last 10 years tribunal claims have trebled to a record 130,000 cases, leading to accusations of a growing "compensation culture". And the CBI highlights Government figures that show 64% of applications come from employees who have not tried to resolve the dispute directly with their employer.

Source: Employment Tribunals Service management information

The totals for 94/95 and 95/96 include multiple applications received following the ruling in the Vroege and Fischer case, and can be considered a one-off effect. Almost half of applications claim unfair dismissal. Discrimination, pay deductions and breach of contract claims make up the bulk of the rest of applications registered.

The Government's consultation document, Routes to Resolution: Improving Dispute Resolution in Britain included these key proposals:

- organisations without dispute resolution procedures in place - or which do not use them when workplace disagreements arise - to have arrangements for managing such disagreements; and

- a new, 'modest charging regime' for use of the employment tribunal system to reduce the cost burden on the taxpayer. Exemptions would apply to those on benefits and in cases of genuine need.

Announcing the proposals, Alan Johnson said in June:

"These are progressive proposals for reform which will create a modern dispute resolution system.

"The Government is convinced that many disagreements can be successfully resolved through better procedures in the workplace between an individual and their employer but equally a tribunal system designed to cope with increasing caseloads is essential. "Over three in five of applications to tribunals come from applicants who have not attempted to resolve the problem directly with their employer in the first instance. Many of the disputes concerned are such that they could potentially have been resolved before they get to the tribunal stage. They are often minor disagreements that escalate.

"That is why the Government is proposing that an in-house system for dispute resolution should be a requirement in all businesses that do not already have one. The cost to a business of defending a tribunal claim is considerable. The cost of defending a claim and replacing a member of staff can typically exceed £5,000 - irrespective of the management costs associated with defending such a claim and damage to workplace relations. A proper dispute resolution procedure in the workplace could resolve disagreements before they impact upon the employer or employee."

The Government also proposed that tribunal users contribute to the cost of dealing with their case arguing that harging a modest amount would bring a faster and more customer-focused service and also raise funding for improvements in the tribunal and conciliation process.

"At least a quarter of all tribunal applications which come from those who are on benefits or in genuine need will be exempt from any charges. These people will still have access to justice."

Other proposals in the consultation document include:

* increasing awards at employment tribunals where a basic new dispute resolution procedure has not been used by the employer - with awards being reduced where an employee has not used the grievance procedures before applying to the tribunal;

* better enforcement and other improvements to the existing statutory requirement for employers to provide a written statement of employment terms to employees (currently businesses with less than 20 employees are exempt from providing full information on internal disciplinary and grievance procedures in the written statement)

* limited extensions to the time limit for lodging tribunal claims where an internal disciplinary or grievance procedure is still in play - in order to facilitate resolution in the workplace;

* introducing a fixed period of conciliation to focus parties' minds within that period on whether or not they were interested in reaching a settlement;

* a limited amendment to unfair dismissal legislation to allow employment tribunals to disregard minor procedural errors by employers, provided such errors have made no difference in practice and the dismissal is otherwise fair;

* a fast-track system to be introduced for certain jurisdictions (such as unlawful pay deductions and breach of contract);

* tribunals to be allowed the discretion to award wasted non-legal costs (such as a party's overnight expenses) in circumstances where a party has acted vexatiously; and

* allow the Presidents of the Employment Tribunals to issue practice directions, in order to achieve greater consistency throughout the country.

"The consultation makes clear the need for change. At the forefront of the Government's thinking are the fundamental principles of access to justice, fair and efficient tribunals and a modern, user-friendly public service."

The CBI published figures in August which showed that legal, management and recruitment expenses alone rose for UK business from £426 million in 1999 to £633 million in 2001. This meant basic tribunal costs rising four-fold over the past decade. These figures do not include costs for out of court settlements, productivity losses and staff cover plus intangibles such as damage to reputation and diversion of management time.

The CBI says the figures show the government is right to want employment tribunal reform and better dispute resolution. It urges opponents of change to acknowledge that the tribunal process is getting out of control and damaging UK employment relations.

Digby Jones, Director-General of the CBI said in August:

"In too many cases the tribunal system is the solution of first resort rather than last resort. That is bad for employers but it is also bad for employees who face a stressful court case and often find themselves out of a job or in lower paying work. While most cases are genuine, firms are worried that a punt-for-cash culture is taking hold. They are often faced with the choice of successfully defending a spurious claim, paying a big legal bill and using up valuable management time, or stumping up a few thousand pounds 'to make it go away' - it often seems like a 21st century version of 'Danegeld'

"We welcome the start the government has made but there is a long way to go. Occasional disputes are inevitable and sometimes the tribunal system is the most appropriate way of sorting them out. But too many cases end in litigation when they could have been resolved in the workplace. We need a fair, efficient tribunal system but we also need all alternatives exhausted before anyone gets near a court room."

TUC General Secretary John Monks said:

'Whilst we agree with the CBI’s desire to reduce the number of tribunal cases, they are vastly exaggerating the extent of the problem. Last year, out of a workforce of 23 million, just 130,000 people made tribunal claims.

'The TUC argues the main cause of this is too many employers without adequate grievance or disciplinary procedures, leaving employees with no choice but to take their bosses to court. The median award for unfair dismissal is just £2,700 - hardly big money and a far cry from the climate of compensation the CBI claims the UK workforce is wrapped up in.

'Government statistics show that where employers work with unions there are far fewer tribunal cases.'