The Employment team welcome the Government's proposals to reform employment tribunals. Far too often we are seeing our business clients struggle with the complexities and hurdles imposed on them by labyrinthine employment regulations and the fear of ending up in an employment tribunal. Any simplification to these areas is a relief for many of our clients.
The aim is to reduce the number of tribunal claims and encouraging solutions out of court. It is thought that small businesses will then have more confidence to hire people and it will also reduce expenditure in the tribunal system.
Tribunal claims rose to 236,000 last year; a rise of 56% on 2009. However the figures must be put into context as many of these are group actions - the figure for individual claims stands at 71,300.
Business Secretary Vince Cable stated "almost 250,000 cases a year are going before employment tribunals½it's very costly for employers and the tax payer½½.small companies have to have the confidence that they can take people on and know they can deal with difficult cases without being hauled before an employment tribunal".
The British Chamber of Commerce says that it costs employers on average almost £8,500 to defend a claim compared to £5,400 to settle.
The proposed changes include:
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Increasing the service requirement in order to bring an unfair dismissal claim from one year to two years. This was the position prior to 1999
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Introducing a fee for bringing a tribunal claim. This may be as little as £30 or it could be a week's pay - the level is yet to be agreed
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Compulsory mediation stage for workplace disputes via ACAS
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Widening the scope for cases where judges can sit alone
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Greater use of costs penalties
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Tribunal forms to give details of the level of compensation available so that an employee's expectations of what they might recover are not unrealistically high.
It has been argued that extending the service requirement for unfair dismissal claims will result in those employees who perceive they have been wronged bringing claims under whistle-blowing, discrimination or the working time regulations instead as there are no qualifying service requirements for these claims. This is a risk, but it will be counteracted by the advantages of simplifying the procedures.
The proposals have unsurprisingly faced criticism from the Unions. Brendan Barber the leader of the TUC said that the Government should concentrate on looking at why some employers, especially small employers, have such bad employment practices in the first place, stating that "if firms treated their staff fairly, few would ever find themselves taken to court".
Labour warned that the proposals relating to unfair dismissal claims are likely to disadvantage women more than men as women are more likely to be in jobs for less than two years. They also argue that the measures on flexible working are less likely to be taken up if people are afraid that they could be dismissed without any consequences.
In addition, the government has published an 'Employers' Charter' to clarify what employers 'can and can't do' when managing their staff. The proposals are up for consultation until 20 April 2011.
