Businesses losing confidence in tribunal system, say CBI
September 30 2005 - A report from the CBI (the employers' organisation) shows that British businesses have major concerns about the complexity of the new employment tribunal procedures despite a fall in the number of tribunal cases since the reforms were introduced last October.
Although the system is supposed to provide cheap and effective resolution of workplace disputes, too many firms are still settling cases they have a strong chance of winning. According to the CBI, this is because they are afraid of the costs of going to tribunals which, they believe, too often allow weak and vexatious claims to be heard.
John Cridland, Deputy Director-General of the CBI, said:
"The new tribunals procedures are falling short. They may be having an impact on absolute numbers but are unnecessarily complicated and run the risk of undermining business confidence. The number one priority for any review must be making the regulations more user-friendly.
"Tribunals, across the country, also need to adopt a more consistent, common sense approach. They must properly judge claims on their merit, allowing deserving ones to be heard while striking out unscrupulous ones".
The CBI's report 'Restoring Faith In Employment Tribunals' marks the first anniversary of reforms aimed at resolving grievances in the workplace rather than at tribunal. It is based on answers by 450 respondents to the CBI/Pertemps Employment Trends Survey 2005, discussions with leading law firms and consultation with CBI companies. The report shows that:
- 100% of companies with fewer than 50 staff settled every claim despite advice they would win almost half the cases
- 26% of all businesses settled even if they felt the claims lacked merit
- 45% of employers believed the system to be ineffective
- 50% reported an increase in weak and vexatious claims in the last 12 months despite the reforms
- 76% encountered extra red tape because of the new reforms
- 26% said the overall system was too costly - each claim costing a business £4,360 in legal fees, on average, on top of management time and stress
- 55% said the tribunal system has become too adversarial
- A further 19 per cent believed it damaged rather than helped employee relations
The CBI considers that changes to both the operation of the employment tribunal system and the statutory dispute resolution procedures are essential to restore employer confidence in the system
It recommends that:
Claimants should be required to make it clear in writing they are lodging a grievance so employers know they have to begin the appropriate procedures. The CBI also recommends that the Government reviews the procedures in relation to redundancies – since October this has been causing employers significant headaches.
Tribunals must make full use of their powers to dismiss weak and vexatious claims and for the process of dispute resolution to be speeded up – as the reforms were intended to achieve. And tribunal chairmen must take a common-sense approach to the new procedures and concentrate on the substance and merit of cases - not overly focus on the technicalities of process.
Costs in weak and vexatious cases should be awarded against losing complainants to deter unscrupulous litigants. This happened in fewer than one per cent of all cases last year and only half of all complainants were aware it could happen - notably 41 per cent withdrew their claim when it was pointed out.
There also needs to be greater regional consistency with businesses reporting different practices in different parts of the country. A charge for going to a tribunal, set at an appropriate level to ensure people have access to justice, should be introduced to deter weak or vexatious claims, the CBI says.
Tim Watts, Chairman of the Pertemps Group, said:
"Employment tribunals are not always even-handed and often favour the employee. We had one case recently where the employee failed to attend on three consecutive occasions, gave no reason for his failure to appear and yet was granted a fourth hearing, when the case was dismissed. We received no costs.
"Too many employers believe they are vulnerable to vexatious and frivolous claims because costs are seldom, if ever, awarded. In the very rare occasion that costs are awarded to us, it is often impossible to enforce."
Commenting on the CBI tribunal survey, TUC General Secretary Brendan Barber said:
'Employment tribunals are an important last resort in resolving workplace disputes and access to them should not be limited to those who can afford to pay. CBI proposals to introduce charges on individual's bringing claims and increase cost awards to employees would limit access to justice for genuine claimants and disadvantage lower paid workers.'
'The suggestion that the tribunal system is clogged up with vexatious claims is ill-founded. However, the new dispute resolution legislation is complicated and the government plans to carry out a review in two years. The CBI should not pre-empt the outcomes of this review before in-depth research has been conducted on how the procedures are operating in practice.'