Compensation fines rise forces many firms to settle

Human resources departments are under increasing pressure because of a surge in employment disputes according to the results of Personnel Today’s exclusive survey.

Nearly half the respondents said they would be more likely to settle out of court since the increase of the compensation limit to £50,000 from £12,000 in October 1999.

But despite this trend 60 per cent of firms also reported a rise in the number of cases going to employment tribunals over the last year.

There was a particularly noticeable increase in tribunal cases among respondents from the service, local government and retail sectors where the average increase was at least 70 per cent.

The amount spent on defending cases in tribunals was at least £1.8 million according to the companies surveyed .Firms taking part in the research also paid out an estimated £700,000 on settling cases before they reached employment tribunals.

Dawn Tucker, personnel manager for Hull-based Nippress Continental thought a variety of developments had resulted in the trend towards an increasing number of employment disputes.

She said, “It is a combination of factors, the increase in the upper limit of compensation from £12,000 to £50,000, the service time for employees (the length of time in employment before an employee can take an employer to an employment tribunal) being reduced from two years to 12 months and more than 200 changes to employment law that have all given greater protection to the individual employee.”


MAIN FINDINGS

The number of days spent by companies defending a case at employment tribunal were:


10 days or more – 12.4 per cent of firms

6-9 days – 19.3 per cent

4-5days – 37.2 per cent

2-3 days – 26.3 per cent

Less than one day – 4.6 per cent.


What proportion of employment tribunal cases do firms win?


17.5 per cent of respondents said they won all of their cases

46.7 per cent won most

20.4 per cent won some

2.2 per cent won none

What proportion of cases are settled before companies go to tribunal?

10.1 per cent of respondents settled all cases before tribunal

26.5 per cent settled most cases

46.8 per cent settled some cases

16.4 per cent settled none


How much do companies spend settling cases out of court?


7.3 per cent of firms spent £20,000 or more

3.2 per cent spent between £15,000 and £19,999

5.7 per cent spent between £10,000 and £14,999

14.7 per cent spent between £5,000 and £9,999

68.8 per cent of firms spent less than £5,000


Effect of £50,000 compensation limit


46 per cent of firms said they would be more likely to settle a case out of court since the introduction of the increase in the upper limit of compensation to £50,000.

51.1 per cent of firms said the new compensation limit would not affect their decision.


Trends in number of cases


59.9 per cent of companies said they had experienced a rise in the number of cases taken to employment tribunals in the last year; 39.4 per cent experienced no rise.

By Ben Willmott

Comments are closed.