Employers and unions argue over 'compensation culture'

Over the summer and early autumn of 2001, the UK employers' organisation CBI has continued to press for reforms to reduce employment tribunal claims. However, the Trades Union Congress contends that employers' claims of a 'compensation culture' exaggerate the problem.

On 21 August 2001, as part of its campaign for further reforms to cut the number of complaints made to employment tribunals, the Confederation of British Industry (CBI) employers' organisation said that the legal, management and recruitment costs to companies facing employment tribunal applications had risen by 50% in two years. The government has been consulting on proposals to reduce tribunal claims, issued in July 2001 (UK0108142N), including promoting the use of internal company procedures and charging to register tribunal claims.

The CBI argues that the tribunal process is 'out of control and damaging UK employment relations'. CBI director-general Digby Jones said in a statement: 'In too many cases the tribunal system is the solution of first resort rather than last resort ... While most cases are genuine, firms are worried that a punt-for-cash culture is taking hold.''

Responding to the CBI statement, the Trades Union Congress (TUC) 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.'

On 5 September, the Guardian newspaper carried a report suggesting that ministers had decided to drop the proposal to charge employment tribunal applicants According to TUC general secretary John Monks, this represented 'a good result for the TUC's quiet diplomacy'. The CBI gave what it called a 'cool response' to the story, stating that '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.''

On 10 September, to coincide with a debate on the issue at its annual conference (UK0110104N), the TUC issued a briefing responding to employers' 'compensation culture' claims. Among other points, this argued that:

• only one in 800 people at work took a grievance to a tribunal in 2000;

• the main cause of the increase in tribunal cases has not been new employment rights but the growth of small businesses which 'lack fair procedures for dealing with staff';

• despite headlines for a few big awards, the median award for unfair dismissal is GBP 2,515 and for discrimination GBP 2,180; and

• employers themselves tend to cause expensive prolonged hearings by using legal representation.

In a speech to the conference, TUC deputy general secretary Brendan Barber said: 'I am fed up listening to employers griping about a so-called compensation culture. Tribunal claims do not arise because sacked workers are 'having a punt'. Only around 30,000 claims a year go to a full tribunal hearing. Meanwhile, as many as three-quarters of a million times a year employers get away with actions that could land them in a tribunal. That is the real scandal.' The conference voted in favour of a resolution opposing the introduction of charges for tribunal claims and supporting the improvement of workplace disciplinary and grievance procedures.

The consultation period on the government's proposed reforms affecting employment tribunal cases was due to end on 8 October. Both organisations are expected to submit formal responses to the Department of Trade and Industry shortly.