The Tribunals Service has published its statistics for 2009/10. As has been the case for the last few years, the news has given rise to headlines of "rocketing" tribunal claims. While it is true that the number of accepted claims for 2009/10 is 56% higher than for 2008/9, there is always a danger in taking such statistics at face value.
Firstly, an increase in claims is hardly surprising given that the country is in a recession. When jobs are hard to come by and employees have poor prospects, it is reasonable to suppose that they are less likely to be philosophical about getting the sack. When times are good and there is a realistic chance of walking into a new job, the prospect of a long, drawn out and potentially expensive tribunal claim is less appealing. Equally, in times of high redundancy rates, there is inevitably going to be a greater risk of an employee bringing a claim. Common sense suggests that if an employer dismisses 50 employees, there is a better chance of getting a few claims (meritorious or otherwise) than if it were to terminate the employment of just one or two people.
- The number of claims accepted by employment tribunals in 2009/10 is 56% higher than for 2008/9, but it is important to look behind the figures at the reasons for the increase, and at the outcomes of claims.
- Of 50,900 unfair dismissal claims brought in 2009/10, only 5,200 were successful at a tribunal and compensation awarded in those claims was relatively low.
- Employers are taking commercial decisions about how they handle claims, recognising when the legal costs in defending a claim are likely to outstrip the cost of settlement by a significant margin.
In any event, the 2009/10 figures are distorted by multiple claims, especially in relation to matters like Working Time claims. Elsewhere it has been reported that approximately 10,000 of the accepted claims relate to one particular employer. Remove multiple claims and the figures show that the increase in single claims was only 14% on the previous year.
Statistics can of course be used by lawyers (and politicians) to support any point they wish to make. Take unfair dismissal claims: of the 50,900 unfair dismissal claims brought by employees in 2009/10, 12,200 were withdrawn, 22,400 were settled by Acas and 3,900 struck out prior to a full hearing. Of the remainder, only 5,200 were successful at a tribunal and, in respect of the successful claims, the median award was £4,903 and the average award £9,120.
One might argue that if an employee brings a claim there is a very good chance it will be settled, and that if it is not settled then the employee is likely to lose. Even when an employee wins, the average and median awards suggest that the compensation will be relatively low. This is of course oversimplifying matters. The majority of employment lawyers and HR professionals will be able to point to many unfair dismissal cases they have dealt with where the settlement figures have been significantly higher than the average compensation award.
So what do the statistics really show?
There has undoubtedly been an increase in claims, but it is arguable that employers are being more realistic about how they are handled. Where employers realise that there is a realistic prospect of losing, or that the legal costs in defending a claim are likely to outstrip the cost of settlement by a significant margin, employers often take the commercial decision to settle. This is an entirely plausible explanation as to why only a relatively small number of claims proceed to a full hearing and why, of those, only a small number succeed.
The headline "Rocketing tribunal claims are dealt with effectively by employers" is not quite as exciting as implying that businesses are being swamped by a deluge of claims. This of course does not mean that employers should be complacent. Whether cases settle or not, there is still going to be a cost, so it is important that a tight control is kept on employment practices. If, however, the worst happens and employers are faced with a claim then it is important to make an early and realistic assessment. Balance the costs of fighting the claim (factoring in the prospects of success), management time and stress against the cost of settling. Lawyers will often argue that businesses have a vested interest in fighting claims, so as not to be branded a "soft touch". Whilst it is inadvisable for employers simply to roll over at the first sign of a claim, it should also be recognised that it makes poor commercial sense to throw money at legal fees if there is a sensible deal to be done.
Sarah Rushton is a partner in the employment group at Dawsons LLP.