Tribunals are “overwhelmingly weighted in favour of the employee,” causing companies to pay large settlements even for claims with no substance, the BCC’s report said.
The average cost for an employer to defend themselves at tribunal is £8,500. However, the average settlement is £5,400, often making it cheaper for employers to settle.
Three in four employers that settle say they have done so to reduce costs or because it is more convenient than lengthy legal procedures.
“Currently, tribunals are too slow,” said Dr Adam Marshall of the BCC. “Ministers must commit to reducing the wait time for a first hearing -- and making the system less of a barrier to business growth.”
Statutory disciplinary and grievance procedures have provoked a culture change, encouraging litigious behaviour, according to employment lawyer Pam Loch of Loch Associates.
Filing a complaint is as easy as completing an online form, she said. Unrepresented or badly informed employees often demand their “day in court” and procedures drag on as judges guide claimants through legal complexities – increasing legal costs to defendants.
And hardly any companies are able to reclaim costs, despite winning cases, the BCC reported. The amount of cases in which reimbursement is paid is close to 0.15 per cent, they said.
Judges could weed out spurious claims to stop wasted time and expenditure, and require claimants to lay down a deposit, Loch suggests.
CASE STUDY 1
A claim was brought against a national facilities management company for equal pay, breach of contract and holiday pay. As the claimant was unrepresented a case management hearing had to take place in person, incurring additional costs. A hearing was set for breach of contract, holiday pay and victimisation claims, with a separate hearing to consider the equal pay claim, as it had to be heard by specialist employment judges.
Due to the nature of the equal pay claim the company felt it had to be defended, as settlement would send out the wrong signal to the workforce. The company knew this would incur substantial costs, as the claimant was known for submitting unfounded grievances and taking up management time with emails and letters.
The claims were dismissed at the first hearing, but further case management discussions on the claimant’s conduct and two further hearings on the equal pay claim were held. The company’s costs were £20,000.
CASE STUDY 2
A successful small business dismissed an employee for stealing alcohol and underperforming. The employee was a female reporting to a male manager. She went off sick while suspended pending her hearing and altered her medical sick note. During this period she continued to work for another employer. The company dismissed her after following the ACAS Code, but she lodged an unfair dismissal and a sex discrimination claim. She also lodged a personal injury claim, claiming she could not work due to an injury she sustained, and complained to HMRC that she had not received any sick pay. Despite HMRC knowing she had amended the certificate it determined that as she had a certificate she should be paid. The employment judge took a different approach and withdrew her sex discrimination claim.
The personal injury claim is ongoing. Though the defence of the other claims incurred thousands of pounds, the business concluded that settling the claim for less than the costs would send out a negative motivational message to staff.
Source: Loch Associates