In its quest to be considered pro jobs creation, the government is considering calls for employees taking a company to tribunal to pay a fee which would be refunded if the claimant won the case.
The previous Government looked into the idea of implementing a fee-based system nearly ten years ago and the current Coalition is now considering the introduction of a fee of anywhere between £30 and £500 after figures showed a 56 per cent rise in claims over the past 12 months.
Figures show that 0.13 per cent of cases last year involved a cost order for employees, with the average cost of £2,288, while all other hearing costs were paid by employers, even if they were the successful party. Interestingly, roughly 60 per cent of cases were settled outside of an employment tribunal because it can cost a company around £8,500 to defend itself whereas a pre-hearing settlement costs closer to £5,500.
The other issue in the melting pot is increasing the qualifying service to launch unfair dismissal proceedings from one year to two years.
All this is done in the name of reducing red tape.
Some observations.
1 The thrust behind introducing a small fee is to be welcomed. Not too high though as this will be oppressive against employees.
2 I am neutral on increasing the qualifying service to two years. Too many small businesses do not know how to treat staff and one year, the status quo is about right. In other words, retain the status quo
Where Employment Tribunals create red tape and waste is in the following areas.
1 They can become complex and expensive forums where legal issues dominate. Some cases which could be settled in a day end up being four day hearings where the legal costs become disproprtionate to the value at stake. The lawyers rule the Employment Tribunal. There is so much legislation and legal argument within Tribunals, they are over-complex. A lawyer is generally indepensible to conducting a case.
2 Often there is no incentive for any party to settle. As costs do not follow the winner and cases can be unpredictable, each party might as well go ahead to a hearing. In the Civil Procedure Rules there are incentives to make Without Prejudice offers but less so, here.
3 Common-sense conduct is not a factor in Tribunals. If a party has acted reasonably, made an offer to settle, why cannot Tribunals take this into account? You do not have to award legal costs but can reduce or increase the size of the award.
4. Acas is erratic. Acas can help immensly, but to often the support is not there.
Justin Patten, Solicitor