Employment tribunal reform under debate

In January 2011, the UK government was preparing for consultations on possible reforms of the employment tribunal system. The Tribunals Service say its latest figures show claims reached a record high, rising by more than 50% due to the recession. Employers have been calling for changes such as fees for claimants and preventing employees claiming unfair dismissal until they have been employed for two years. Unions have expressed concern at the prospect of such changes.

Rising number of claims

Employment tribunals adjudicate individual employment law disputes between employees and employers relating to issues such as unfair dismissal, pay, working time and discrimination (UK0403101T). According to the most recent data (547Kb PDF) from the Tribunals Service, in the year to 31 March 2010, 236,100 claims were made to employment tribunals, an increase of 56% on the same period in 2008–2009 and the highest figure on record. This increase was largely as a result of a 90% rise in multiple claims (made by two or more people, usually against the same employer) but also, the Service reports, ‘partly as a result of the changing economic climate’.

Of claims to tribunals in 2009–2010, 126,300 related to unfair dismissal, breach of contract and redundancy (claims often refer to more than one topic), which was 17% higher than in the same period of 2008–2009 and 62% higher than in 2007–2008. The Tribunals Service says that this is ‘likely to be a result of the economic recession’.

Review planned

The Conservative-Liberal Democrat coalition government, which took office in May 2010 (UK1005019I), is planning consultations on a review of employment law, aimed at encouraging job creation in the private sector and reducing burdensome ‘red tape’ for businesses. The details had not been officially announced by mid-January, but media reports indicate that the government will consult on two key proposals relating to employment tribunals. These are:

• introducing a fee for employees bringing claims at tribunals, which would be refundable if they win their case;

• increasing, from one year to two, the qualifying period of continuous employment required before an employee may bring a claim for unfair dismissal on most grounds.

Employer criticism

Employer organisations have been seeking changes to the employment tribunal system for some years and recently intensified their campaign. John Cridland, the Director-General of the Confederation of British Industry (CBI), stated in January 2011 that the system is ‘broken’ and that most claims could be resolved through mediation or conciliation before reaching a tribunal. He called for the introduction of a fee for employees bringing claims, greater use of pre-hearing reviews to eliminate weak or spurious claims, and the more frequent awarding of costs against employees bringing meritless claims.

The British Chambers of Commerce (BCC) has been particularly vocal in its criticism of employment tribunals. In January 2011, it published research findings indicating that the average cost for an employer to defend itself at a tribunal is GBP 8,500 (€10,170 as at 17 January 2011). With the average settlement standing at GBP 5,400 (€6,460), it is often cheaper for employers to settle, even if faced with a spurious claim, and 58% of claims are settled before reaching a tribunal hearing.

The BCC commented:

The employment tribunal system is in dire need of reform. Currently, tribunals are too slow and overwhelmingly weighted in favour of the employee. Small and medium-sized employers across the UK tell us the current tribunal system creates risk and uncertainty. Ultimately, it’s a barrier to job creation. The current system is perverse – forcing businesses to settle spurious claims rather than fight them, simply because it is more cost-effective.

The BCC urged the government to consider introducing a fee for claimants, and to reduce the waiting time for a first hearing (the current median wait is over 22 weeks).

Unions defend system

The Trades Union Congress (TUC) has urged the government to ‘stand firm in the face of the intense employer lobbying over tribunal reform’. Rather than ‘complaining about the cost of cases and supposedly vexatious claims’, employers should be ‘working harder at treating their staff well, improving their employment practices, and ensuring they stay within the law’. The TUC argues that an increase in the qualifying period for claiming unfair dismissal would ‘prevent thousands of wronged employees from challenging their employers, and allow companies to sack staff at whim’. Further, introducing a fee for claimants would ‘deter many employees with genuine cases, especially low-paid individuals who have just lost their jobs and no longer have a salary to rely upon’.

The TUC General Secretary, Brendan Barber, said that any change to the tribunal system should focus on making it ‘more effective at delivering justice to the thousands of people who every year are wronged at work’.

Mark Carley, SPIRE Associates/IRRU, University of Warwick