“Legal parasites feeding on small businesses” or protectors of rights?
5 January 2011
The future of the employment tribunal system is under review by the coalition government, and the players who are to win and lose from the changes are setting out their positions.
Depending on where you stand, the employment tribunal system is either a refuge for greedy lawyers and scurrilous claimants, or an essential bulwark against workplace abuses. In reality, like the rest of the court system, it can be both but is usually something in between. As such, the coalition should consider its options carefully, and listen to both sides of the debate, before making any decisions on reform.
The employers have been putting their case this week. In a debate on this morning’s BBC Radio 4 Today program (listen here), the Director General of the Confederation of British Industry (CBI) John Cridland said that the current system of employment tribunals is “broken” and that “everybody other than the lawyers lose”.
Meanwhile, in yesterday’s Times, Helen Giles, a human resources advisor to small charities, in an article entitled “Stop legal parasites feeding on small business” wrote that “small businesses and charities are groaning under the burden of complying with employment law that encourages employees to misrepresent themselves as victims of bullying and discrimination”. The system is “heavily loaded” against businesses. She suggests that “The burden of proof in discrimination claims should be placed on the employee and there should be stronger prima facie evidence of discrimination before allowing a claim to progress”.
Considering the statistics, in fact the number of individual claims has remained fairly stable, ranging from around 60,000 to 80,000 per year over the past 10 years. So, the burden on small businesses and charities which Helen Giles refers has probably remained constant. It is larger businesses which tend to be affected by group claims. Professor Richard Moorhead has posted a detailed and myth-busting analysis of the statistics here.
The CBI has ideas for reform too. It is urging the coalition to introduce a fee or deposit for bringing an employment claim, in order to buck a trend which saw employment claims rise by 56% last year to 236,100 (the statistics are here), mostly the result of multiple claims. According to the Financial Times, ministers are sympathetic to a fee ranging from £30 to £500.
The employment tribunal system was created by the Industrial Training Act 1964 as industrial tribunals. They were and remain independent judicial bodies consisting of a lawyer chairperson and two other members. They were intended to act as a simple and informal means of resolving disputes, but some argue that they have become as formalised and lawyer-heavy as ordinary civil courts, but without the stronger judicial control over proceedings which has become the norm since the 1999 Civil Procedure Rules.
It is unsurprising that the number of employment claims has increased in light of the poor economic climate. But a poor economy cuts both ways, affecting employers as well as employees, and the coalition is looking at ways to make the system more employer-friendly.
The coalition’s Programme for Government promised to “review employment and workplace laws, for employers and employees, to ensure they maximise flexibility for both parties while protecting fairness” but did not specifically mention the tribunal system.
One of the aspects of a review of enterprise policy announced in November by the former enterprise “tzar” Lord Young was to extend the period of time an employer must have worked for a small company before they can bring a claim for unfair dismissal from one year to two. “Back in the 1980s when we did that, the result was that employment started shooting up again,” he told BBC Radio 4’s Today. It is not clear what the position is now following Lord Young’s resignation after telling a newspaper that people had “never had it so good”.
From a perspective of employment rights, tinkering with the unfair dismissal qualifying period, or introducing a fee, is likely to have a significant effect on employees with grievances, and may prevent many from bringing claims. However, a more pernicious outcome may be to encourage employees to bring claims under other grounds with no qualifying periods, for example discrimination or whistle-blowing.
Any change will have an effect on employee’s rights. Employment law frequently crosses over with human rights law, and this is particularly true of discrimination law, which has no time limit for bringing a claim and which has mostly arisen as a result of European directives. The formerly disjointed collection of discrimination rules and regulations has recently been consolidated into the Equality Act 2010, most of which is being implemented by the coalition.
Not all legal debates affect such large groups. The ongoing debate over control orders, an anti-terrorism instrument which allows police to impose stringent conditions on terror suspects who have never appeared in court, shows how much time and energy can be spent on issues which, although important in principle, only affect only a handful of people.
On the other hand, any change to the employment law system, however small, could have an enormous effect on a significant proportion of the population, both employees and employers. Any reforms should therefore be considered carefully and all voices should be heard first. This is particularly important given that many of the criticisms made of the system – for example the “huge” increase of no-win-no-fee claims and the wisdom of proposals to make claims pay respondents’ costs – are more myth than reality.
So, although they may sometimes house “parasites”, and may need tweaking to become more effective and less choked with claims, employment tribunals also provide protection for millions of employees and a deterrence against scurrilous employers.
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